Market Commentary: One in a Million

by Gayl Mileszko

One in a Million

We are counted every ten years by the U.S. Census Bureau. There were 333 million of us at the last check. Pollsters group us by gender and zip code. Test scorers place us in percentiles.  Feasibility consultants sort us by age and income. All of this pigeonholing goes on, but none of us likes to get lumped into a blanket category. Hispanic. Soccer Mom. Stay-at-home Dad. Nerd. Golden child. Believer. Butterball. Dinosaur. Prius driver. Redneck. Southpaw. Boomer. Hipster. Karen. Shrimp. When it comes to “Me”, no labels or stereotypes should ever apply.  We really are all unique. Just like everyone else.

Banding Together

People, companies, and nations do band together under one banner when interests align. Seventy-five years ago, on April 4, 1949, the United States and eleven other sovereign states from Europe and North America formed the North Atlantic Treaty Organization to guarantee the freedom and security of its members through political and military means. Since that time, 20 other nations have joined the Brussels-based alliance including, most recently, Finland in 2023 and Sweden in 2024. This week, NATO announced it is preparing for “all contingencies”, including a Russian expansion of its war on Ukraine into allied territory. Leaders will gather in Washington this July to discuss a 5-year $100 billion package of aid for Ukraine among other matters including whether Hawaii and other member territories far from the North Atlantic boundaries set in the documents, are covered by the treaty.

Corporate M&A

In the corporate arena, cash-flush buyers are again pursuing high value targets as fears of recession fade. GlobalData reports that the volume of controlling stake corporate mergers and acquisitions in 2023 only totaled $2.2 trillion. In the U.S. senior living and care sector, LevinPro counted 491 of such M&A transactions.

Communities for Seniors

Seniors who were isolated at home during the pandemic are packing up, selling their homes, and moving into active adult or life plan communities featuring like-minded neighbors, attractive amenities and locations, and many services provided by a concierge or tailored to meet resident interests, needs, and budgets. There are approximately 2,000 LPCs, and 234 active adult communities in the U.S. New research by NORC at the University of Chicago finds that older adults living in senior housing communities live longer, receive more support with home health, and benefit from greater preventive and rehabilitative care.

Forming Charter Schools

Parents in towns and cities across the country have established approximately 8,000 charter schools with specialized curricula to better meet their children’s needs. And charter school parents are more satisfied with their children’s schooling experiences compared to district school parents, according to EdChoice’s national 2023 Schooling in America Survey. 

Joiners and Dropouts

The average American might belong to several organizations and drop in and out of others. About 140 million of us claim a Protestant affiliation.  AAA boasts of 59 million members, up from 31 million in 1989. The AARP has 38 million members, up from 36.3 million in 2006. On the other hand, union membership in the U.S. declined to 14.4 million or 10% in 2023, down from 17.7 million or 20.1% in 1983. The NRA has 4.3 million members, down from 6 million in 2018.  And a Gallup survey in January found that political party affiliations are at an all-time low:  twenty-seven percent of Americans identify as Democrats, and twenty-seven percent as Republicans. Independents began to outnumber those with party registrations in 1991 and currently constitute about 43% of all voters.

Primary Concerns

Voters in five states headed to the polls on Tuesday to cast ballots in primary elections. Results may help to shed more light on prospects for control of the White House, House, Senate and many state and local offices in 2025. Traders are following these outcomes with keen interest as they have great bearing on tax, spending, and regulatory agendas and policies impacting the economy, inflation, debt, immigration, trade, and engagement in foreign conflicts.

Market Movers This Week

This week, possible new clues about the direction and timing of interest rates are expected from Federal Reserve officials appearing at 19 different events. With Congress in recess for another week, most of the news coming from Washington will be in the form of scheduled data reports on jobs, job openings, manufacturing and construction spending along with results from six Treasury auctions. Only a handful of quarterly corporate earnings are on the calendar, and there are only two weeks to go until Tax Day, so some market volatility is expected as investors withdraw funds from short-term and liquid instruments.

Recap of the First Three Months of 2024

The first quarter of the year came to a close last week with most index and sector gains coming in Bitcoin (+57.5%). oil (+16%), the S&P 500 (+10.55%), Nasdaq (+9.32%), and gold (+8%). In fixed income, the best performers were preferred (+4.50%), high yield municipals (+2.61%), leveraged loans (+2.48%), convertibles (+2.28%) and high yield corporates (+1.47%). Among the major sectors reporting losses on the quarter were natural gas (-30%), iron ore (-25%), steel (-24%), coal (-18%), Treasuries (-0.96%), taxable munis (-0.41%), and investment grade municipals (-0.34%). The Bond Buyer reports that municipal issuance in the first quarter totaled $99.1 billion while investment grade corporate bond issuance exceeded $529 billion, topping the previous record by 10 percent.

Fund and Deal Flows

Investors have more than $6 trillion in money market funds where rates remain very attractive. During the quarter, a net of $51.4 billion was added to conventional mutual bond funds, including $11.3 billion in municipal funds, and a net of $14.4 billion to bond ETFs, including $391 million in muni funds. Positive fund flows are in contrast to the steady outflow afflicting muni funds in the first quarter of 2023 and contribute to the array of strong technical factors supporting the tax-exempt sector. Last week saw $10.4 billion of issuance, well above the weekly 12-month average volume of $7.5 billion. The calendar included a $246.7 million non-rated deal for the Miami Worldcenter project that was structured with a single 2041 maturity priced at 5.00% to yield 5.25% and sold through the Wisconsin Public Finance Authority. Three Pillars Senior Living Communities brought aa $108.2 million BBB-minus rated financing through the Wisconsin Health and Educational Facilities Authority that included a final maturity in 2059 priced with a coupon of 5.75% to yield 5.53%.

Unique Inversions and Below Average Ratios

The Treasury yield curve has been inverted since July of 2022. The spread between the 2-year at 4.64% and the 10-year at 4.26% is 38 basis points. The highest yields are displayed by the 1-month and 2-month yields, both at 5.39%. The short end of the municipal bond yield curve has been inverted since December of 2022. At present, the one-year AAA general obligation municipal bond benchmark yield stands at 3.24%, well above the 17-year maturity at 3.18%. The 10-year muni yields 2.51% and the 30-year 3.68%. Muni/Treasury ratios are well below historical averages with the 10-year at 58% and the 30-year at 82%. Higher ratios point to more attractive municipals.

April Showers

April sales typically average 9% less than March, and this first week points to what could be an even bigger drop this year. There is only one high yield special tax deal totaling $6.4 million on the entire slate and it includes $500 million of taxable corporate bonds for Cornell University. At this writing, both the stock and bond markets are weaker at the start of the new month.  A variety of factors are in play. Despite the generally remarkable signals of economic strength that continue in the face of so many headwinds over the past few years, these include elevated geopolitical risks, a growing acceptance that rates will stay higher for longer, rising oil prices posing new risk to the inflation outlook, and the New York Fed’s recession model which still predicts a 58.3% chance of a recession sometime in the next 12 months. First quarter corporate earnings season kicks off on April 12, and all markets will be scrutinizing consumer trends and forward-looking estimates provided by chief executives.


The volume of municipal sales in March rose to $36.4 billion, nearly $2 billion above the 10-year average, and brought the total for the quarter over $100 billion. This first week of April, we expect only about $4 billion of sales, disappointing to investors who saw $21.3 billion of principal and interest payments hit their accounts on April 1 with another $9.5 billion coming by the end of the month.

Springing Ahead

The start of a new quarter calls for a review of borrowing plans, portfolio holdings, and investing strategies for the rest of the year.  Reach out to your HJ Sims representative today to schedule a discussion on how to best take advantage of market conditions to improve your position and income.