Municipal bond yields continued their ascent, following U.S. Treasuries higher, as markets adjust to rising rates and an improving economy that created an environment in which stocks sold off not because of economic uncertainty but stabilization. The atypical relationship — falling stocks and rising USTs — is likely temporary as global markets essentially recalibrate, moving away from COVID-impacted investments, such as technology companies, and back into traditional investments that were put on the wayside during the pandemic. Municipal triple-A benchmarks rose another three to six basis points, with the largest cuts longer out the curve. Munis are correcting after sitting idle for well over a month as its taxable counterparty moved into higher-yield territory since the beginning of the year. A lot of the pressure on munis is tied to U.S. Treasury and global bond markets selling off due to the perception of a stabilizing global economy with sunnier views of vaccine effectiveness and stimulus.
Source: The Bond Buyer