By Gayl Mileszko
Market Commentary
Field Day
With the World Series underway, we are not taking sides — but we are taking a close look at the object at the heart of all the game’s strikeouts, home runs, walks, wild pitches and stolen bases: the baseball.
If you think that there are as many types of balls as there are bats in use, you would be wrong. Major League Baseball has some much more precise specifications about balls, intended to ensure fairness on at least one front. Each ball is in fact handmade at a Rawlings factory in Costa Rica, with a sphere of cork or rubber at the core, wrapped in sheep wool yarn from New Zealand, covered in Tennessee Tanning Company dairy cowhide leather, and sewn with precisely 108 double stitches using standardized red waxed thread. The Rawlings factory workers are clearly kept busy: 2.4 million baseballs are needed by the pros each year. The average life of a ball in the majors? Seven pitches.
Rosin and Magic Rubbing Mud
Over the years, some pitchers have been known to try and use sunscreen, Vaseline, saliva, hair tonic, nail files, or glue, for example, to enhance their grip or increase the ball’s spin rate. But only two substances are actually allowed to touch a baseball under the rules. One is powdered rosin, an extract from the sap of fir trees, controlled by umpires and kept in a bag placed behind the mound. The second is a very special kind of mud — Lena Blackburne rubbing mud — that is applied to each ball before play to remove the shine and give it a uniform grip. It sounds quite strange, but this is the only approved muck, renowned for its perfect ratio of silt and dirt. It has no smell and does not blacken or scruff the ball in the least. This “magic mud” is extracted each July by a boat crew that scoops up hundreds of pounds of the stuff from a secret mud hole on a Delaware River shore in New Jersey – just enough for one season — and stores it barrels until it is packed and shipped ahead of the next Opening Day. The mud’s name derives from the third base coach for the Philadelphia Athletics who supplied the first batches in 1938.
Muddy Outlook for Economic Data
Not much data is coming out of the government to help us get a grip on the economy. But few traders appear worried. For some, the outlook is muddy, one month into a government shutdown. Privately reported data point to some weakening in the labor market and the tariff-related uncertainties impact on inflation projections. But financial markets, normally reliant upon weekly official government statistics, are not (yet) disturbed, assuming that there will be a resolution before there are any major disruptions. Last week, a skeleton crew at the Bureau of Labor Statistics was called back to work to calculate the consumer price index for September; this number was needed by the Social Security Administration to announce the 2026 cost of living adjustment for more than 70 million recipients. The CPI rose 0.3% last month, 3.0% year-over-year. The 2.6% COLA announced by the SSA is actually based on the average CPI for urban wage earners and clerical workers in the third quarter versus the average for in the third quarter of the previous year. This week we will NOT see GDP, personal income, personal spending, or personal consumption expenditures data. But we have scores of data from the Conference Board, the National Association of Realtors, the Mortgage Bankers Association, the Institute for Supply Management, and the Federal Reserve Banks of Dallas, Richmond, and St. Louis.
Field Conditions
Even without the usual data, analysts are having a veritable field day this week given the wide array of potential market moving events at home and abroad. In addition to the news and non-news from the Federal Open Market Committee meeting just ended, five finalists for nomination as Fed Chair were just named. There are 11 Treasury auctions scheduled. One previous Fed nominee has proposed that the Treasury issue a special bond backed by gold to shore up the U.S. dollar. Gold prices peaked last week at $4,347 per ounce, but have since lost 8%. Stock market indices are busting records set only a short time ago. Five of the Magnificent Seven technology companies with a combined $15 trillion of market capitalization are reporting third-quarter earnings, with Nvidia the first to become a $5 trillion company. Early voting has begun in New York City and New Jersey. The President is making a wide swing through Asia, meeting with several world leaders, securing billions in new business investments and several new trade agreements.
Fair and Foul
There is plenty of good news to propel all the financial market rallies. But investors do not wear rose-colored glasses. The CNN Fear and Greed Index registers widespread fear and this explains in large part the $7.39 trillion of assets sitting in money market funds. Our thoughts are with the people of Jamaica, Cuba, and all those in the devastating path of Hurricane Melissa. There is a lot of monkey business – and more to come – with artificial intelligence, and lots of talk about needing a stomach of steel to handle all the chatter about an imminent AI bubble. We are concerned by violations of the U.S. brokered Gaza peace deal. We are frustrated by the stalemate in Washington, by the inability of so many parties to resolve differences outside of courtrooms. Russia’s Burevestnik missile, said to be a new class of weapon, nuclear-powered and -capable, reportedly undetectable with unlimited range, is alarming. The repositioning of the U.S.S. Gerald R. Ford from the Mediterranean Sea to South America, and our military’s growing presence near Venezuela, feel troubling. And the NBA-mafia ties in the latest gambling scandal have rattle the leagues, the sports betting industries, and many sports fans.
Muni Box Scores: Financing for Charter School and Senior Living Teams
Fans of tax-exempt bonds have been very active this month. Last week alone saw about $18 billion of issuance, including four charter schools and two senior living financings. Florida’s Capital Trust Authority sold $22.2 million of non-rated drawdown bonds due in 2060 for Pineapple Cove Classical Academy at West Melbourne priced with a 7.25% coupon. The South Carolina Jobs-Economic Development Authority brought a $33.8 million non-rated financing for Libertas Academies structured with 2065 term bonds priced at par to yield 7.25%. The Utah Charter School Finance Authority had a $17 million Aa2 rated state-guaranteed expansion deal for Voyage Academy in Clinton, featuring a 2060 final maturity priced at par to yield 5.00%. Kenosha Schools of Technology Enhanced Curriculum in Wisconsin sold $17.9 million of non-rated bonds through the state’s Health and Educational Facilities Authority structured with a 35-year term bond priced at par to yield 7.25%. The New York State Dormitory Authority had a $67.6 million BBB rated sale for Fox Run at Orchard Park that came with a 30-year maturity priced with a coupon of 5.125% to yield 5.10%. And the Ulster County Capital Corporation issued $32.3 million of non-rated bonds for Woodland Pond at New Paltz that featured 2059 term bonds priced at 5.875% to yield 5.95%.
HJ Sims in the Batter’s Box with Rolling Green Village
This week, HJ Sims is in the market with a $133.5 million non-rated expansion financing for Rolling Green Village in Greenville, South Carolina, a continuing care retirement community with a unit mix including 205 independent living, 28 assisted living, 22 memory care and 74 skilled nursing beds, plus 291 patio homes which are individually owned in fee simple interest. We still have two trading sessions to finish, but it appears that municipal bond market returns will be the best for any October in thirty years. Last week, approximately $18 billion of new bonds were issued, and fund flows exceeded $1.1 billion. CreditSights reports that muni exchange traded funds have taken in $29.5 billion so far this year, beating the record last set for the full calendar year of 2022. High yield and non-rated munis, intermediate and longer maturities have performed exceptionally well of late. Taxable muni index returns are up 8.78% year-to-date, beating Treasury index returns at 6.61%. The 2-year AAA municipal general obligation bond yield currently stands at 2.44%, the 10-year is at 2.70%, and the 30-year benchmark is at 4.10%. At this writing, the 30-year Treasury yield is 4.59%.
November Line-up: HJ Sims On Deck with Wesley Commons Bond Sale
Looking ahead, November sadly marks the end of the 2025 baseball season. But, even with its two holidays, this is a seasonally positive month for municipal bonds. On Saturday, $21.8 billion of principal and interest will post to bondholder accounts, and another $20.2 billion will follow later in the month. HJ Sims will be back in the market next week with a $45.9 million expansion financing for Wesley Commons, a Type B life plan community in Greenwood, South Carolina with a unit mix consisting of 190 independent living, 46 assisted living, 14 memory care, and 80 skilled nursing beds. The non-rated bonds are being offered through the South Carolina Jobs-Economic Development Authority to accredited investors and qualified institutional buyers in $25,000 denominations. Please contact your HJ Sims representative for more information.
Your HJ Sims Coach
As October comes to an end, we hope that all our little trick-or-treaters get their fill of sweets and that our farmers in Illinois, Indiana, Pennsylvania and California are again able to meet the Halloween demand for about 1.3 billion pounds of pumpkins. We celebrate every inning of this exciting World Series and marvel at the record-smashing performances of Shohei Ohtani and Trey Yesavage. Give us a call to discuss your batting average this year, your unmet goals, and how we can help coach you to hit all pitches out of the park in these final two innings of the year.