Economic indicators

In a wide-ranging conversation, Manulife Investment Management Global Chief Economist & Global Head of Macroeconomic Strategy Frances Donald discusses the COVID pandemic, inflation, how the markets may be misreading the Fed, why economic indicators may not be telling economists what they need to know, ESG and green spending, and the economy. Gary Siegel hosts. (35 minutes)

Global bond yield move suggests financial markets are much more optimistic about the economy than the Fed.

High-grade deals priced and secondary trading showed bonds exchanging hands at yields higher than triple-A benchmarks in some cases, but a healthy two-way flow was evident, even if there are signals that yields have not yet hit a ceiling.

Data released Monday showed economic strength with further improvement ahead. U.S. Treasuries were off by five basis points but municipals saw aggressive eight to 10 basis point swings to higher yields across the curve.

Muni yields rose another five basis points on the 10- and 30-year, bringing the total cuts to scales to 18 and 17 basis points, respectively, from Tuesday as the asset class moved closer to UST movements after lagging that market since the start of the year.

Muni yields have climbed double-digit basis points in a week but technicals remain strong. Refinitiv Lipper reports $1.96 billion of inflows into municipal bond mutual funds.

The municipal secondary gave way to higher-yields and triple-A benchmarks rose two to five basis points. U.S. Treasuries pared back Tuesday's losses, even on the heels of better economic data.

With the U.S. Treasury sell off, municipal to UST ratios fell below 55% in 10-years.

The COVID-19 pandemic threw the economy into disarray, creating uncertainty in so many areas, and economists still don’t agree on the future of inflation. But they agree the Fed will need to adjust when the economy starts to improve.

Refinitiv Lipper reported $2.64 billion of inflows into municipal bond mutual funds. The overwhelming demand for the large deals priced this week demonstrates the flood of available cash that continues to support a strong market.