By Gayl Mileszko
Record Numbers
Quite a few records are being set this year – and there are still three more months yet to go. Not all holders are thrilled to be on the top — or bottom — of the lists. The Chicago White Sox lost 121 games this season, the most in baseball history. The people of Phoenix, Arizona suffered through 113 straight days of temperatures over 100 degrees and just set a new high for October 1 at 110 degrees. Our national debt has reached a peak of $35.42 trillion and is still climbing, exceeding 123.4% of GDP. But then we have 29-year-old Detroit Lions quarterback Jared Goff who threw 18 perfect passes for 292 yards in Monday’s night’s victory over the Seattle Seahawks. The WNBA attracted an all-time record of more than 54 million unique viewers this season as Caitlin Clark rewrote all the record books. Coldplay has sold more than 10 million tickets and hauled in $1.05 billion at the box office, edging out Taylor Swift with the highest grossing concert tour ever. On Sunday, Berlin hosted a marathon that set a world record for the number of runners finishing the race: 53,627. And, on Tuesday, Jimmy Carter of Plains, Georgia, became the first American president to celebrate his 100th birthday. His term ended in 1981, 43 years ago when he was a relatively youthful 56.
All-Time Highs in the Financial Markets
In the financial markets, exchange traded funds saw inflows of $280 billion last quarter, an all-time high. Money market fund assets climbed by $121 billion last week bringing the total to an astonishing $6.42 trillion. On Monday, just days after the Federal Reserve lowered its target rate by 50 basis points and the Congress and White House avoided a government shutdown by approving a 3-month stopgap funding measure, the S&P 500 hit its 43rd record high of 2024, and the Dow notched its 33rd record close. The Nasdaq has seen 26 new record highs this year, most recently on July 10. Gold prices peaked last month at $2,668 an ounce.
Strong September Performance Despite Volatility
September and the third quarter came to an end on Monday. Given all the uncertainty over Fed monetary policy, ongoing inflation and recession fears, the China stimulus measures, the BRICS summit hype, the Boeing strike and dockworkers’ threat, and escalating conflict in the Middle East, it turned out to be a good month for stocks, bonds and most commodities. The S&P U.S. Aggregate Bond Index gained 1.24%, the Treasury Bond Index closed up 1.24%, and the U.S. High Yield Corporate Bond Index added 1.56%. In the tax-exempt sector, the S&P Municipal Bond High Yield Index reported a 1.4% return, bringing the gains for the year up to 7.79%. The investment grade muni index closed up 1.01% on the month and 2.89% year-to-date. Taxable munis added 1.19% and are outperforming Treasuries year to date with 2024 returns so far of 5.47% versus 3.39%.
HJ Sims in the Senior Living Market Last Week
As part of a three-phase repositioning plan, HJ Sims underwrote a draw down financing of up to $45 million for Clark Lindsey Village, a single site life plan community in Urbana, Illinois, on July 27, 2023. Since bond proceeds were not needed all at once, they are being drawn down in installments, issued and paid for when drawn. Each draw is treated as a new tax-exempt bond with its own issue date. The second advances for $12.38 million were made in March and April of this year. The third advance of $10.19 million was just made on September 26 for this community, designated as one of only a handful of centers for successful aging in the nation, located adjacent to the University of Illinois. Among other senior living financings last week, the City of Wichita sold $77.4 million of non-rated refunding bonds for Presbyterian Manors; the transaction included a final maturity in 2054 priced at par to yield 6.00%. And the Florida Capital Trust Authority issued $23.4 million of non-rated revenue anticipation notes for Convivial St. Petersburg structured with a single term bond in 2029 priced at par to yield 12%.
HJ Sims in the Private School Market Last Week
HJ Sims underwrote a $34.8 million non-rated bond issue for La Scuola International School in San Francisco. This is a PreK-8 private, independent school serving 436 students and offering an Italian immersion program. We sold the bonds through the California Infrastructure and Economic Development Bank in $250,000 denominations to qualified institutional buyers and accredited investors and included three term bonds. The final maturity in 2064 priced with a coupon of 5.25% to yield 5.32%. Also In the private school space, the Castilleja School Foundation in Palo Alto, California had a $105.6 million A rated financing that included a 30-year maturity priced at 4.00% to yield 4.06%. And the Classical Academy of Sarasota came to market with an $18.1 million non-rated transaction issue through the Florida Capital Trust Authority, featuring a 2059 term bond priced at par to yield 5.25%.
Charter School Sales Last Week
In the charter school sector, The American Leadership Academy sold $201.6 million of non-rated bonds through the Sierra Vista Industrial Development Authority in Arizona for facilities in Mesa; the deal was structured with a final maturity in 2064 that priced with a coupon of 5.00% to yield 5.12%. Lifeschool of Dallas brought a $118.6 million deal guaranteed by the Texas Permanent School Fund and rated AAA that had a final maturity in 2054 priced at 4.125% to yield 4.28%. The Academy of Accelerated Learning in Houston, Texas brought a $6.6 million issue, also PSF-guaranteed, that had a 30-year final maturity priced at 4.125% to yield 4.27%. And Mater Academy of Nevada had a 30-year $55.8 million BB rated transaction with a final maturity priced at 5.00% to yield 4.83% that was issued by the conduit Public Finance Authority of Wisconsin.
Municipal Market Developments
The Municipal Securities Rulemaking Board reported $50.26 billion of September volume, the sixth straight month of issuance in excess of $40 billion. In 2024, we have seen 7,975 deals in the market with combined par of $404.6 billion. Flows into municipal bond mutual funds and ETFs were positive for the 13th straight week; high yield funds have taken in about $12.5 billion this year according to Bloomberg. High yield muni sales so far this year total about $20 billion, up from $7.6 billion last year, and on par with the 5-year average. Five new municipal bond ETFs were launched last week, bringing the total number now to 110 with $142 billion of assets. In addition, BlackRock announced its plan to convert its $1.7 billion high yield municipal bond fund into an actively traded iShares ETF, the latest in a series of approximately 86 industry-wide conversion announcements. Traders were surprised by the Securities and Exchange Commission’s sudden approval of a reduction in the current 15-minute standard for reporting municipal trades to one minute with certain exceptions that took into account objections raised by HJ Sims and others with an active retail client base whose transactions often occur through personalized negotiations rather than on electronic platforms.
Market Movers This Week
This week our markets, like all of America, are concerned with the human loss and major rescue, recovery, power restoration, and repair work underway in the wake of Hurricane Helene. The President has said he is considering calling Congress back into session to provide disaster relief funding, but members left town last week and do not plan to come back until November 12. Investors are gaming the impact of election outcomes and counting the days until November 5 and the Fed rate decision to come on the following day. Much attention will be focused on the jobs data this Friday, just one in a series of economic reports that include job openings, factory orders, construction spending, auto sales, manufacturing and services this week. There are 14 Fed officials on the speaking circuit. Many traders will of course tune into the vice presidential debates on Tuesday night, but all are very closely following developments in the strike that began early Tuesday morning by the International Longshoremen’s Association at 36 eastern U.S. ports; 45,000 union members are seeking significant pay raises and bans on the use of automated equipment.
On the Record
As we begin the final quarter of the year, we invite you to reach out to your HJ Sims representative to review your track record and plans for year-end. Let us know how we can help set you up for a record-breaking year in 2025.