February 13, 2020 – In its monthly municipal market review published today, PIMCO noted the Bloomberg Barclays Municipal Bond Index posted a gain of 1.80% in January 2020, making the largest monthly gain in five years.

While January has traditionally been a strong month for municipal bonds due to what industry practitioners call the “January effect” aka issuer redemptions scheduled for January/February, muni outperformance in January was largely fueled by a Treasury rally resulting from global economic lethargy and coronavirus related uncertainties.

The AAA MMD yields for 2, 5, 10 and 30 year maturities declined by 21, 25, 29 and 29 basis points, respectively, for the month of January. Treasury yields for 2, 5, 10 and 30 years declined by 23, 35, 39 and 37 basis points, respectively.

Taxable bonds continue to be popular, with $6.6 billion (or 22%) of primary issuance out of $29.6 billion total municipal bonds issued.

In the secondary market, PIMCO noted that total trades of 682,000 marked the fifth lowest monthly volume since July 2016, although the total par traded of $252 billion was a 10-year high, suggesting retail trades declined.

Contact Jumanne Johnson at JJohnson@buymuni.com.