Buy side

The red wave that took the presidency and the Senate — along with increased odds of a Republican victory in the House — was hanging heavily over fixed income markets Wednesday, with munis and UST yields rising up to 17 basis points, with the largest losses out long.

"If the GOP wins the House, the specter of risk to the municipal bond tax-exemption will increase," said Edwin Oswald, a tax partner at Orrick Herrington & Sutcliffe in Washington D.C.

"A victory for former President Trump is likely to be viewed as ushering in a more inflationary environment, whereas a win for Vice President Harris will probably be seen as closer to the status quo," said Erik Weisman, chief economist and portfolio manager at MFS Investment Management."

Investors should "brace themselves" for further volatility, as uncertainty is likely to remain, said Tom Kozlik, managing director and head of public policy and municipal strategy at HilltopSecurities.

October's "price path has created wider spreads but also brought higher yields that are now in the range where a broader audience may begin to take notice," said NewSquare Capital Senior Fixed Income Portfolio Manager Kim Olsan, noting higher taxable equivalent yields for different tenors of the yield curve.

Nearly $1 billion of outstanding BABs may still be called back before yearend.

Oppenheimer's Head of Public Finance Beth Coolidge and Columbus Auditor Megan Kilgore delve into the future of public finance and human infrastructure on a wide range of topics, from affordable housing and workforce development to public health, climate resiliency, and digital access.

The correction to the municipal market has improved muni to UST ratios while uncertainty hangs over ahead of the election. J.P. Morgan's Peter DeGroot said the firm expects the end of next week "will mark the end of the difficult technical period in 2024 and believe that net supply in November will lead to better valuations broadly in the municipal market."

Several macro trends have converged to drive growth in municipal bond issuance, said participants at The Bond Buyer's California Public Finance conference.

The event went on as scheduled Tuesday against a backdrop of escalating conflict between the mayor and controller, with each requesting a probe of the other.