16Rock Asset Management

Hedge Fund Alert The Weekly Update on Fund Management Intelligence #municipalbonds #longshort #election #opportunity For Professional Investor Use Only

Muni market sees sharp correction in selloff The Bond Buyer | Jessica Lerner (...) Other macroeconomic and political factors have rattled markets overall. Treasury rates "have spiked sharply as a Republican election win looks more likely, raising concerns about deficit spending and inflation." said JAMES PRUSKOWSKI, chief investment officer at 16Rock Asset Management. This shift has "stirred uncertainty, softening secondary liquidity in the muni market," he said. The increased probability of a Republican victory has led to an acceleration in supply as "issuers rush to secure funding amid policy uncertainty," JAMES PRUSKOWSKI said. "Coming off rich muni-Treasury ratios, the market has swiftly repriced," he said. "With now cheaper benchmark yields and wider credit spreads, fresh capital is flowing in, and a strong bottoming opportunity looks to be emerging." https://lnkd.in/gcCG_24N #municipalbonds #election #usa #inflation #supply #opportunity

Americas Municipals Weekly Primary Review / Build America Bonds Tracker Primary Supply to Hold Steady at $12.6B; Market Expects ‘Rush to Finance’ as Election Day Approaches Reorg | Hoa P. Nguyen The primary market is expecting $12.6 billion in new-issue supply this week, according to the new calendar issue on EMMA. “With election uncertainties and growing expectations of a Republican victory, we’re seeing a rush to finance,’ said JAMES PRUSKOWSKI, chief investment officer at 16Rock Asset Management. “While lower taxes could pressure the asset class, infrastructure policy may fuel growth, and a divided government with heavy federal debt makes tax cuts unlikely.” While supply and subscriptions have been at a record level, high yield issuance remains scarce and “investors are shifting from credit product to structure risk to capture opportunities,” JAMES PRUSKOWSKI said. The 10-year Municipal Market Data (MMD) benchmark was 2.78% on Oct. 17, the same level it had been throughout the week. The 30-year MMD also remained at 3.66% over the same period. Municipal mutual funds reported weekly inflows of about $1.7 billion for the week ended Oct. 18, compared with out $419 million of inflows the week before, according to Barclays Research. Net year-to-date inflows totaled about $29.8 billion, including $19.5 billion for mutual funds and $10.3 billion for exchange-traded funds. “Despite rich muni-to-treasury ratios, absolute yields remain highly attractive, especially on a taxable-equivalent basis,” said JAMES PRUSKOWSKI. “As equity markets reach new highs, the value of municipals is rising – offering high credit quality, stable income, and a volatility-dampening effect on overall portfolio allocation.” #municipalbonds #trump #flows #supply #taxes #assetallocation

Muni-Bond Sales Surge by the Most Since Last US Election Rush Bloomberg | Amanda Albright (...) “As the election approaches, this surge in supply is expected to be well absorbed,” said JAMES PRUSKOWSKI, chief investment officer at 16Rock Asset Management, adding that demand has been supported by the Federal Reserve’s interest-rate cuts. He noted that muni bonds still look attractive even as yields are still more expensive compared to Treasuries. “Despite stretched muni-UST ratios, absolute yields remain highly attractive, especially on a taxable-equivalent basis,” he said. Link: https://lnkd.in/e3yzwxRu #municipalbonds #election #trump #harris #supply #demand #valuations #taxes

Americas Municipals Weekly Primary Review Primary Market Expects $14B in Supply This Week; Demand for New Issues Strong Reorg | Hoa P. Nguyen The municipal market expects $14.1 billion in primary supply this week, a slight uptick from the last couple of weeks, which brought about $11 billion each in primary issuance. “While rising rates have softened secondary liquidity, demand for new issues remains strong,” said JAMES PRUSKOWSKI, chief investment officer at 16Rock Asset Management. Total issuance, however, “is falling short of market expectations and will likely taper as the election approaches,” paving the way for a post-election supply spike driven by uncertainty over a new administration, he added. Reorg has tracked bond measures that voters will weigh on Election Day. Bond measures increased to $81 billion from $61 billion over the past month, according to Reorg data. The 10-year MMD benchmark ended Oct. 10 at 2.75%, up 21 bps from a week earlier. The 30-year MMD yield 3.66%, up 17 bps week over week. The surge in rates in recent weeks has finally caught up with the municipal market, which has “dampened some of the bullish momentum” that has been building in the asset class, Pruskowski said. “Valuation are now locked in a tug of war between rich ratios and cheap taxable-equivalent yields,” he added. Several deals pricing with deep concessions and deep-discount coupon structures in the long end could be seen as a bullish signal, but “it is more likely a reaction to high-yield inflows, with limited issuance forcing funds to pivot,” Pruskowski explained. #municipalbonds #supply #rates #relativevalue #election

In a heavy new-issue market, specialty states, HY see oversubscriptions The Bond Buyer | Jessica Lerner (...) Last week, issuers in California and New York "commanded" some of the strongest demand for new issues, said JAMES PRUSKOWSKI, chief investment officer at 16Rock Asset Management.   The California State Public Works Board's $795.525 deal and the New York City Municipal Water Finance Authority's upsized $877.865 million deal were oversubscribed by as much as 10 times in certain maturities, with price adjustments reaching up to 10 basis points from “initial talk,” he said. “This surge is no coincidence-it’s the result of weeks of relentless inflows, further amplified by the Federal Reserve’s recent rate cut,” Pruskowski said. "As economic powerhouses with diverse economies and some of the steepest tax rates in the country, California and New York consistently act as market bellwethers," he said. “The market is shifting,” Pruskowski said. “Municipal-Treasury valuations are attractive, and even with record issuance this year, there’s an excess of cash pursuing too few bonds. Investors are prioritizing long maturities and structure risk over credit risk to secure best income.” Link: https://lnkd.in/gnuhH5TJ #municipalbonds #california #newyork #income #taxes #fomc #supply #demand #valuations

Buffalo Bills Fans Snap Up Stadium Bonds in Tax-Shy New York Bloomberg | Maxwell Adler and Amanda Albright (...) “For top tax-rate payers in New York, this was hard to pass up,” said JAMES PRUSKOWSKI, chief investment officer at 16Rock Asset Management. “This AA-rated credit offered a rare opportunity to lock in high yields without having to take on substantial credit or liquidity risks typically required in other markets to achieve similar returns.” https://lnkd.in/gZ5tDMW2 #municipalbonds Buffalo Bills #billsmafia #taxes #newyork #nyc

Americas Municipals Weekly Primary Review / Build America Bonds Tracker Municipals Market to Expect Heavy Supply Between Now and Election Day After Fed's 50-Bps Rate Cut; Opportune Time to Lock in Longer-Dated Bond Yields Reorg | Hoa P. Nguyen JAMES PRUSKOWSKI, chief investment officer at 16Rock Asset Management wrote: "The rates market went into the Federal Reserve meeting a little hot and has since retraced by about 15 basis points in a classic 'buy the rumor, sell the news' trade." "Municipals have remained steady, highlighting a strong alignment between muni-treasury valuations and prevailing risk conditions." "As fresh economic data rolls in and the macro narrative sharpens, the muni market is well-positioned to absorb an increase in new issuance." "Inflows into the asset class are accelerating, and with monetary policy no longer a negative for rates, there is strong momentum and an urgency for investors to allocate capital." #municipalbonds #election #fomc #supply #demand

Munis ignore UST weakness following Fed cut The Bond Buyer | Jessica Lerner (...) For municipals, Wednesday "marks a crucial step forward, perfectly aligned with the current risk landscape," said JAMES PRUSKOWSKI, chief investment officer for 16Rock Asset Management. With elevated muni-UST ratios and strong inflows into munis, the asset class is in an "excellent position to absorb a surge in new issuance," he said. "The narrative is incredibly supportive, and robust retail demand only strengthens the case for municipals," Pruskowski said. https://lnkd.in/eK-UPcXu. #municipalbonds #fomc #assetallocation #opportunity

Market grows in Q2; ETF, SMA ownership increases The Bond Buyer | Jessica Lerner (…) The market has structural demand for income and equality, so it’s no surprise that SMAs are rising,” said JAMES PRUSKOWSKI, chief investment officer at 16Rock Asset Management. The asset management world is creating simpler solutions and better workstreams, as well as technological advances, to allow SMA retail clients to enter the market, he noted. https://lnkd.in/eazG3Qas. #municipalbonds #growth #sma #etf #income #opportunity