HJ Sims Market Commentary: Tenure

by Gayl Mileszko

The longest serving legislator in America, and the last World War II veteran to serve in a state legislature, resigned earlier this year after 64 years in public office. Fred Risser, 94, of Madison, Wisconsin, was first elected to the Wisconsin state assembly when he was 29, the fourth generation in his family to represent his district. Six years later he won a special election to the state senate. He served as its president for 26 years and was never defeated in an election. When he was first sworn in, back in 1956, Dwight Eisenhower was president, and Alaska and Hawaii were just U.S. territories. A new house could be had for well under $20,000 and a new Ford for under $2,000. A gallon of gas cost 22 cents, bakers charged 18 cents for a loaf of bread, and the total charge for tuition, room and board at Harvard was $1,000.

Power Brokers Over Time

The last World War II veterans in Congress retired in 2014 and no one has come close to Navy pharmacist mate Risser’s record of tenure in Washington. There is worthy debate on the subject of term limits, but those with decades of experience have much perspective to offer, favors to trade, bonds and relationships to rely upon, and powers to exercise. After nearly 49 years in the House, Don Young of Alaska, 88, is its longest serving current member. And, at nearly 47 years, Patrick Leahy, 81, and Chuck Grassley, 87, share the title on the Senate side. This week, the two senators joined 67 of their colleagues to vote in favor of the $1 trillion infrastructure bill, a measure designed to make sorely needed improvements in roads, bridges and tunnels but one that may further fuel the inflation that is squeezing many Main Street voters. The median sale price of a home in the U.S. is now $374,900. The cheapest new Ford on the lot in Madison, Wisconsin goes for $25,226. A gallon of gas in Montpelier, Vermont costs $3.05. A loaf of Wonder Bread at the Carrs-Safeway in Anchorage, Alaska costs $4.79. Tuition, fees, room and board at Harvard this fall amounts to $74,528.

Bond Prices

High prices are all too familiar with bond buyers. Ten-year TIPS yields are yielding negative 1.051%. Uber Technologies just sold $1.5 billion of B-minus rated senior unsecured bonds with a 4.50% coupon due in 2029 now trading at $100.25. Disney bonds with a 3.60% coupon due in 2051 are trading at $113.20. In the municipal bond sector, Columbia University revenue bonds due in 2050 are trading at $167.77. Boston College revenue bonds due in 2055 currently yield 2.22%. Kaiser Permanente revenue bonds due in 2047 are trading at $156.921. Maryland general obligation bonds due in 2028 are yielding 0.359%. Zero coupon Santa Barbara Elementary School GO bonds maturing in 2036 trade at $142.40 to yield a negative 2.927%.

Market Conditions

Following a stronger-than-expected jobs report last week in which nonfarm payrolls rose 943,000 and the July jobless rate fell to 5.4%, some speculated that all it will take is one more robust report in September for the Fed to announce the dreaded start to tapering. Municipal benchmark yields rose by as much as five basis points Friday on the news. The week finished with AAA general obligation yields in 2022 at 0.08% in 2022 and 2023. The yield on the 10-year tax-exempt settled at 0.87%, and the 30-year at 1.43%. But munis outperformed the moves in Treasury bonds. The 10-year Treasury yield rose eight basis points to 1.29% while the 30-year was up nine basis points to 1.94%. Muni/Treasury ratios were at 67% in 10 years and 73% in 30, according to Refinitiv MMD. Bloomberg reported that institutional muni investors offered $2.13 billion for sale through bid-wanted lists last week, down 13% from the prior week; trading in the muni market totaled $40.2 billion, up 16% The stock market closed out the week higher, with the S&P and Dow ending at record highs of 4,437 and at 35,209, respectively. The Nasdaq closed at 14,836 and the Russell 2000 at 2,246. Volatility as measured by the CBOE Volatility (Fear) Index fell 11.5% to 16.15. Crude oil prices dropped to $67.89 a barrel and gold fell to $1,763.5 an ounce but Bitcoin was up 4.3%.


There has not been much of a summer lull in the markets – as of yet, anyway. Parents are starting to see younger children off to their school buses already, and settle the older ones into college dorm rooms. There is some but not much headline news giving direction to stock and bond traders. We have all somehow adapted to highly unusual, extraordinary conditions and interventions. The 24/7 news cycle often gives us more forward guidance than we need or want sometimes but, absent the occasional upset, most U.S. markets are naturally leaning toward rally mode. Passage of the so-called bipartisan infrastructure bill on the Senate side was assumed, as was the departure of the New York governor. There is a flood of cash that continues to pour into short-term markets, a stream of students and office workers returning to campuses and high rises that have been dusty for more than 16 months. Investors are still attuned to every economic data release as well as each speech made by the many Federal Reserve officials on the talk circuit. Along with the rest of the nation and the world, Wall Street is carefully following the spikes in Delta variant cases and all the chatter about possible changes in policy, mandates, and consumer behavior that may ensue. Major concerns about the economic recovery seem to have lessened temporarily after Friday’s jobs data, but the risk of the Fed slowing its monthly bond purchases is now elevated. More attention is being paid to the debt ceiling as consideration of the budget resolution released by Senate Democrats begins. There are no less than six Treasury auctions scheduled for this week alongside a long list of corporate earnings releases.

Municipal Bonds

The 30-day supply of municipal bonds totals $9.68 billion while redemptions and maturities exceed $27.7 billion. New money has been pouring into municipal bond funds for 66 weeks with only two minor hiccups. This week’s muni calendar will likely exceed $8 billion. It includes airport deals for Pittsburgh and Alaska, a forward deal for the State of Maryland, a sustainable New York City Housing bond issue and 28 separate school district issues. In the high yield sector, there is also a $22 million Ba1 rated charter school issue for Doral Academy of Northern Nevada and a $77 million Conroe, Texas convention center hotel financing with a BBB-, BB- and non-rated series.

Contact Us

In the high yield municipal primary market, last week HJ Sims priced $77.8 million of BBB rated revenue and refunding bonds for LifeSpire of Virginia. We structured the bonds with serial bonds maturing from 2022 to 2026 and term bonds due in 2031, 2036, and 2041. The max yield bonds in 2051 had a coupon of 4.00% and priced to yield 1.95%.

This week, we are serving as a co-manager on a $27 million non-rated new money and refunding issue for WindsorMeade, the life plan community in Williamsburg, Virginia. We have a number of other financings in the pipeline, and a team of banking, trading, underwriting, analytic, operations, and sales professionals on staff to help meet your needs. We invite you to review our bios and track record on our website. Introduce yourself to one aligned most closely with you, or call upon our veterans with 40 and 50+ years for insight. We are proud of our 86 years of client service, love our industry niche, and always aim for excellence.

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