Munis Are Near Cheapest Levels in a Year

Summary

Bloomberg's Aashna Shah tells Scarlet Fu that US municipal bonds are near their cheapest levels relative to Treasuries in about a year. The muni-treasury ratio hit 75%, its highest since last September, as heavy issuance and softening demand collide with a broader fixed-income selloff. She says the ratio is a useful gauge of muni buying opportunities and notes that nontraditional buyers could help absorb supply.

• US state and local government bonds are near one-year cheapest levels versus Treasuries.
• The muni-treasury ratio reached 75%, the highest since last September.
• Heavy muni issuance and softening demand are pressuring the market.
• A broader fixed-income selloff and investor wariness on inflation and Treasury rates form the backdrop.
• Munis traditionally attract high-net-worth buyers seeking tax exemption.
• Market watchers see potential for nontraditional buyers to absorb supply.
• The muni-treasury ratio is framed as a gauge of buying opportunity.