By Gayl Mileszko
Market Commentary
‘70s Show Reruns
We cannot help but feel as if we are in a deja vu moment. But it is definitely not worthy of a sitcom comedy and, since we remember how troubled the ‘70s often were, this is not a bout of nostalgia. But history sometimes repeats itself and quite frequently rhymes. Fifty years ago, some of us were feather-haired, wearing bellbottoms, and sitting in a station wagon with wood panels, listening to a cassette tape of Pink Floyd, reading MAD magazine while being driven to the movie theater to see the debut of Star Wars. Back then, Apple was just being launched out of a garage in Los Altos, California and Apollo 17, the last manned mission into deep space, was launched from Kennedy Space Center. Today, nearly one fifth of the world’s population has an iPhone, and astronauts on the Artemis II mission were rocketed into space last week to take them around the moon and back for the first time in 56 years. In 1975, the U.S finally ended its undeclared 10-year war against North Vietnam. Today, we hope to be on the verge of ending our 6-week undeclared war against Iran. There are still many critical points to be negotiated, but we, and the world, are hopeful. America celebrated its bicentennial in 1976 and is preparing for the semiquincentennial this July. NATO celebrated its 30th anniversary in 1979 but now President Trump announced he is considering pulling out of the “paper tiger” alliance. “Death to America” was the rallying cry in the 1979 revolution in Iran which produced the Islamic Republic; the regime’s state-sanctioned rhetoric has continued for 47 years.
Wholly Unholy
The Middle East is the birthplace of three major Abrahamic religions; Judaism, Christianity, and Islam, and more than half of the world’s population adheres to one. It is also a place where minority communities practice faiths. These include Druze, Zoroastrianism, Yazidism and Bahaism. All preach peace, but we know firsthand that actions taken in the name of faith are not always peaceful but are often extremely violent. The history of conflict in the Middle East traces back to ancient times. Most of the holiest of days of the year are observed at this time of year: Passover, Easter, Ramadan, Zivarat al-Nabi Shu’ayb, Nowruz, Sersal, and Naw-Rúz. But wars are being waged throughout the region. Much hope is being placed in the mediation efforts by the Muslim-majority nations of Egypt, Pakistan, and Turkey during the two-week U.S.-Israel-Iran ceasefire.
Swings, Dips and Spikes
After more than a year of muted reactions to most every major policy, economic and geopolitical shock, financial markets have recently seen major swings during volatile sessions driven by concern over the direction of oil prices, the ships full of fertilizer trapped outside the Strait of Hormuz, the degree of potential impact on gasoline and food inflation and higher Treasury yields, the strained NATO alliance, and the adversaries supplying Iran with intelligence, missiles and drones to prolong the war. Since the US-Israeli attacks began on February 28, Brent crude prices have swung by $46 a barrel, gold prices by $925 an ounce, the S&P 500 index by 538 points, the Nasdaq composite by 2,013 points, the 10-year Treasury yield by 49 basis points, and the 30-year AAA municipal benchmark by 37 basis points. Stock market volatility as measured by the VIX index reached a 12-month high of 31.05 on March 27. The MOVE index, a measure of bond market volatility, jumped 42 points to hit a 12-month high of 115 on March 26. At this writing, since the President’s announcement of a 2-week ceasefire, volatility indices have dropped, the Dow has gained 1,156 points, oil prices have fallen $16, gold prices are up $100, muni yields are down 8 basis points, and Bitcoin has gained $2,947. We will see what happens tomorrow and in the next fortnight.
Record March Municipal Bond Issuance
Despite the uncertainty and mixed messages, weak Treasury auctions and spiking yields, municipal bond issuance totaled $50.08 billion in March, up 17% year over year, and the largest monthly supply on record for March. Some deals were delayed and some issues downsized, but higher construction costs, cutbacks in federal funding, and ongoing infrastructure needs fueled market activity during the month and continues to spur market entry this month. Investors received $31 billion of principal and interest payments during the month, and they were attracted to the higher yields being offered. Underwriters saw steady institutional and retail demand and saw many deals oversubscribed. HJ Sims considered all these factors when bringing the $165 million non-rated California Public Finance Authority financing for The Marisol, a new 214-unit rental assisted living and memory care community coming to Huntington Beach. We structured the deal with an optional call in 5 years and a mandatory tender at par in 7 years and sold the bonds with a coupon of 5.10% to yield 5.35%. This week, we are in the market with a $51.5 million Public Finance Authority refunding and new money issue for Explore Academy Albuquerque, a K-12 charter school with 1,418 students and a 12-year operating history.
Recent Senior Living Deals
Five other senior living deals came to market in March. In the investment grade space, Odd Fellows Home in California sold $101.7 million of insured AA-minus rated bonds; the final maturity in 2056 yielded 4.66%. Presbyterian Homes in Illinois came with a $61.5 million A-minus rated issue sold with a 2042 final maturity yielding 4.55%. And Mennonite Village in Oregon sold $86.2 million of BBB rated bonds with the final maturity in 2061 yielding 5.45%. Among the higher yielding transactions in this sector, Benevolent Corporation Cedar Community brought an $89.6 million BB+ rated deal structured with a 2061 final maturity that was priced to yield 5.62%. And Episcopal Homes in Minnesota sold $15.4 million of non-rated bonds that included a 2059 maturity yielding 6.00%.
Charter and Private School Issuance
In the education space, we saw ten charter schools with $267 million of combined par and two private school issues totaling $86.7 million. There were non-rated issues for Desert Star Academy in Fort Mohave Arizona, Hayden Canton Charter School in Hayden, Idaho, Desert View Middle School in Yuma, Arizona, and The Learning Center in Royal Palm Beach, Florida. Four charter schools with below investment grade ratings came to market for Orange Springs in California, Cornerstone Charter Academy in Belle Isle, Florida, Brookside Charter School in Kansas City, Missouri, and Triad Math & Science Academy schools in North Carolina. There were also successful sales for Baa3 rated Magnolia Public Schools in Los Angeles, and BBB-minus rated South Bronx Classical Charter School in New York. The private school financings in March featured BBB+ rated Milken Community School in Los Angeles and non-rated Providence Academy in Rogers, Arkansas. These schools all came with final maturities ranging from 2033 to 2065 and yields from 5.00% to 8.183%.
Pressures Persist
Municipal bond buyers last month were not immune to the energy price shocks, fear of rising inflation, and diminishing hopes for a rate cut by the Federal Reserve. Traders started to think about higher odds of a rate hike. Prices fell across the board; the 10-year MMA municipal price index reflected a loss of 5%. Some investors began to liquidate muni holdings to raise money for tax payments. Mutual funds felt the pressure of outflows for the first time in about 17 weeks. Although they took in a net of $4.135 billion, high yield funds lost $1.14 billion in March. At month-end, investment grade municipal indices underperformed Treasuries: the ICE BofAML muni index closed with returns down 2.22% for the month and -0.18% year-to-date while Treasuries lost 1.80% in March and are up 0.09% in 2026. High yield munis reported returns of -1.68% last month but are +0.80% higher on the year. Futures trading indicates the probability that the next rate cut will not come until September 2027. Polymarket traders, however, see a 71% chance of a cut in October.
Groovy, Far Out Times
The 1970s were monumental in many ways. During that transformative decade, the digital age began and we adopted new perspectives on government, war, the environment, and equality. We celebrated the first Earth Day in 1970 and 12 days later saw 20 Ohio National Guardsmen fire 69 rounds, killing four Kent State students and wounding nine as they protested the Vietnam war, invasion of Cambodia, and the Guard’s presence on campus. The U.S. dollar went off the gold standard, the first microprocessors, floppy disks, and pocket calculators were introduced, and emails appeared in 1971. In 1972, we had the moon landing, the SALT arms treaty, Title IX, The Godfather, HBO, the Pong video arcade game, and the opening of relations with China. In 1973, food inflation exceeded 20%, we withdrew troops from Vietnam, saw the first MRI and mobile phone. In 1974, we had the first and only resignation of a U.S. president. Microsoft was born, the first laser printers came out, and Jaws aired in 1975. In 1976, we watched the Viking Mars space probe landing, watched Rocky, and celebrated the U.S. Bicentennial. Apple II rolled out in 1977. GPS made its debut in 1978. In 1979, sixty-six Americans were taken hostage by Iranian militants, and most were held for 444 days. We listened to disco, punk rock, hard rock on our Sony Walkmans. We had gasoline shortages and witnessed a partial nuclear meltdown at Three Mile Island in 1979. The 10-year Treasury yield began the decade at 7.79% and closed it out at 10.8%. Thirty-year fixed rate mortgage went from 7.5% to 11.20%. The Fed funds effective rate rose from 8.98% to 13.78%.
Navigating Volatile Times in the ‘70s and Now in the ‘20s
HJ Sims was in its fourth decade of operations during the tumultuous years of the 1970s. Then, like now, we helped our clients navigate a volatile economic landscape impacted by war, inflation, rates, oil price shocks, a weakening dollar, and political polarization. Back then, our debt was $845 billion, and the debt-to-GDP ratio was 31%. Today, with over $39 trillion of debt, the ratio has risen to 122%, so we definitely face a greater challenge. The trajectory of Treasury yields has been moving upward since the start of this decade, and that has impacted munis, muni borrowing, and muni bond structures. Volume continues to increase. Net Treasury issuance back in 1979 was $50 billion, but municipal bond issuance was even higher at $66 billion. In 2025, the numbers were quite different: $1.9 trillion of net Treasury issuance versus $587 billion for munis. Today, we have much more sophisticated tools, bankers, traders, and buyers, and borrowing needs have magnified. Reach out to your HJ Sims representative this week to share any of your recollections of the ‘70s and let us know how we can help to position you properly for the remainder of the ‘20s.