Oil prices continue their sell-off this morning despite minimal evidence that military action will subside, including a recent military incident in Saudi Arabia over the weekend. Today, ICE Brent Crude Oil dipped to $95 per barrel, even as geopolitical risk remains largely unchanged. Oil’s slide is rooted in optimism that peace will prevail in Iran. Although the decline in oil prices began prior to the midterm elections, the intensity increased following last week’s democratic sweep. In addition, the Bureau of Labor Statistics released its monthly employment report which revealed broad-based employment growth that far exceeded analyst expectations. However, wage pressure remains low, with average hourly earnings advancing only 3.1% from a year earlier, matching the slowest pace since 2021. This week, the market will be closely following the release of the CPI report on Tuesday.
ICE Brent Crude Oil Futures
Insights and Strategy
Over the past week, the Treasury curve flattened a bit while munis steepened a bit. However, anxieties regarding the Fed’s rate path are very apparent, with the continued steepness in short Treasuries from one to two years. Although the short-end of the Treasury curve is very locked-in, municipals have rallied. Yields for municipals with tenors two years and shorter are 10 bps lower this week while the long-end, for both munis and Treasuries, has shifted lower. Long munis outperformed long Treasuries last week, with municipal yields dropping around nine bps versus only five bps for Treasuries. The result is an almost parallel shift lower for munis and a flatter Treasury curve. The municipal yield curve is steepest from about 12 to 17-years with a slope of 69bps over this relatively short range.
The result of recent yield adjustments is municipal/Treasury ratios that have generally declined (richer) over this past week. The largest changes occurred in the longer intermediate part of the yield curve, from 10-years to about 17-years. However, the changes over the past month have been far more dramatic, particularly at the 1-year tenor, where ratios have plummeted from over 70% to under 60%, this dramatic shift is due to munis rallying on the short-end while Treasuries remained stable. Ratios across the entire first 10-years of the yield curve are now well under 70%. Investors seeking to maximize curve positioning with relative value now need to extend to the 17-year tenor where they can capture approximately 86% of the 30-year municipal curve with approximately half the maturity extension. Furthermore, ratios in this part of the curve are approaching 80% of Treasuries. However, flattening further out the curve has made extending maturities less rewarding, but ratios are cheaper with investors capturing just under 90% of Treasuries at 30-years. Although, the yield curve is very flat over these longer tenors with a total slope of only 34 bps from 21-30-years.
US State and local governments are expected to sell $5.76 billion in new issues this week, which is down from an expected $7.22 billion last week. Notable deals include: the Commonwealth of Massachusetts, which plans to sell $762.8 million of bonds; Pennsylvania Housing Finance Agency has scheduled $450.1 million; Riviera Beach Utility Special District is expected to offer $436.2 million; and, Metropolitan Atlanta Rapid Transit Authority is scheduled to bring $242.6 million to the market. Last week, investors added $287 million to municipal bond funds. However, high-yield funds experienced outflows of $54 million, this marks nine consecutive weeks of outflows. Redemptions and maturities in the next 30-days narrow to an expected total of $22.3 billion, which is up from $19 billion last week, according to data compiled by Bloomberg. Furthermore, during the month of November, total monthly reinvestment proceeds are projected to reach approximately $41.7 billion.
Herbert J. Sims & Co. Inc. is a SEC registered broker-dealer, a member of FINRA, SIPC. The information contained herein has been prepared based upon publicly available sources believed to be reliable; however, HJ Sims does not warrant its completeness or accuracy and no independent verification has been made as to its accuracy or completeness. The information contained has been prepared and is distributed solely for informational purposes and is not a solicitation or an offer to buy or sell any security or instrument or to participate in any trading or investment strategy, and is subject to change without notice. All investments include risks. Nothing in this message or report constitutes or should be construed to be accounting, tax, investment or legal advice.
November 9, 2026 | Timothy Iltz
Overview
Oil prices continue their sell-off this morning despite minimal evidence that military action will subside, including a recent military incident in Saudi Arabia over the weekend. Today, ICE Brent Crude Oil dipped to $95 per barrel, even as geopolitical risk remains largely unchanged. Oil’s slide is rooted in optimism that peace will prevail in Iran. Although the decline in oil prices began prior to the midterm elections, the intensity increased following last week’s democratic sweep. In addition, the Bureau of Labor Statistics released its monthly employment report which revealed broad-based employment growth that far exceeded analyst expectations. However, wage pressure remains low, with average hourly earnings advancing only 3.1% from a year earlier, matching the slowest pace since 2021. This week, the market will be closely following the release of the CPI report on Tuesday.
ICE Brent Crude Oil Futures
Insights and Strategy
Over the past week, the Treasury curve flattened a bit while munis steepened a bit. However, anxieties regarding the Fed’s rate path are very apparent, with the continued steepness in short Treasuries from one to two years. Although the short-end of the Treasury curve is very locked-in, municipals have rallied. Yields for municipals with tenors two years and shorter are 10 bps lower this week while the long-end, for both munis and Treasuries, has shifted lower. Long munis outperformed long Treasuries last week, with municipal yields dropping around nine bps versus only five bps for Treasuries. The result is an almost parallel shift lower for munis and a flatter Treasury curve. The municipal yield curve is steepest from about 12 to 17-years with a slope of 69bps over this relatively short range.
The result of recent yield adjustments is municipal/Treasury ratios that have generally declined (richer) over this past week. The largest changes occurred in the longer intermediate part of the yield curve, from 10-years to about 17-years. However, the changes over the past month have been far more dramatic, particularly at the 1-year tenor, where ratios have plummeted from over 70% to under 60%, this dramatic shift is due to munis rallying on the short-end while Treasuries remained stable. Ratios across the entire first 10-years of the yield curve are now well under 70%. Investors seeking to maximize curve positioning with relative value now need to extend to the 17-year tenor where they can capture approximately 86% of the 30-year municipal curve with approximately half the maturity extension. Furthermore, ratios in this part of the curve are approaching 80% of Treasuries. However, flattening further out the curve has made extending maturities less rewarding, but ratios are cheaper with investors capturing just under 90% of Treasuries at 30-years. Although, the yield curve is very flat over these longer tenors with a total slope of only 34 bps from 21-30-years.
US State and local governments are expected to sell $5.76 billion in new issues this week, which is down from an expected $7.22 billion last week. Notable deals include: the Commonwealth of Massachusetts, which plans to sell $762.8 million of bonds; Pennsylvania Housing Finance Agency has scheduled $450.1 million; Riviera Beach Utility Special District is expected to offer $436.2 million; and, Metropolitan Atlanta Rapid Transit Authority is scheduled to bring $242.6 million to the market. Last week, investors added $287 million to municipal bond funds. However, high-yield funds experienced outflows of $54 million, this marks nine consecutive weeks of outflows. Redemptions and maturities in the next 30-days narrow to an expected total of $22.3 billion, which is up from $19 billion last week, according to data compiled by Bloomberg. Furthermore, during the month of November, total monthly reinvestment proceeds are projected to reach approximately $41.7 billion.
Herbert J. Sims & Co. Inc. is a SEC registered broker-dealer, a member of FINRA, SIPC. The information contained herein has been prepared based upon publicly available sources believed to be reliable; however, HJ Sims does not warrant its completeness or accuracy and no independent verification has been made as to its accuracy or completeness. The information contained has been prepared and is distributed solely for informational purposes and is not a solicitation or an offer to buy or sell any security or instrument or to participate in any trading or investment strategy, and is subject to change without notice. All investments include risks. Nothing in this message or report constitutes or should be construed to be accounting, tax, investment or legal advice.