Thornburg Investment Management Co-Head of Investments Jeff Klingelhofer in The Bond Buyer

Munis outperform big UST sell off post-Powell announcement

Municipals were lightly traded and outperformed a large sell-off in U.S. Treasuries while equities were mixed following President Biden’s decision to renominate Jerome Powell as Federal Reserve Chairman.

Since Powell is seen “as slightly less dovish than [Lael] Brainard, more rate hikes and more immediacy of those hikes is making its way into the yield curve,” said Jake Remley, senior portfolio manager at institutional investment manager Income Research and Management. “While rising rates will hurt bonds’ mark-to-market, higher yields, both nominal and real, will attract new capital into the asset class.”

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