Elevated Yields Keep Municipal Bonds Attractive, Says Nuveen — Market Talk
1445 ET - Municipal bonds in the U.S. continue to offer advantages relative to Treasurys despite recent choppiness, according to a Nuveen report. Yields have risen as investors harvest losses and swap into ETFs, among other factors, Nuveen says. Supply keeps rising, but new issues have been largely absorbed. "We believe the recent underperformance, largely due to volatility and technical pressures, continue to present a compelling opportunity for investors with cash on the sidelines to lock-in elevated yields and attractive valuations." the firm says. Nuveen estimates the tax equivalent yield in a 10-year AAA muni reaches 6.93%, compared to 5.23% in a 10-year Treasury. ([email protected]; @ptrevisani)1357 ET - IonQ's latest acquisition, a $1.3 billion deal to buy cybersecurity firm Elisity, shows the quantum computing company is seeking to have a hand in the full quantum tech stack, StoneX analyst Gary Mobley says in a note. He believes the deal will help IonQ provide quantum-specific cybersecurity measures in anticipation of "Q-Day," an industry term for the point at which quantum computers become capable of breaking common encryption methods. "By far, IONQ has been the most aggressive in consolidating the full quantum stack, and as a result, IONQ is establishing the most revenue and R&D scale in the quantum industry," Mobley says. "As the industry evolves, this could prove to be a strategic advantage." IonQ falls 9.2%. ([email protected])1345 ET - The estimated funding level of pension plans sponsored by S&P 1500 companies increased by 1 percentage point in September to 113% as a result of an increase in discount rates slightly offset by a decrease in equity markets, according to professional-services firm Marsh. As of the end of September, the plans' estimated aggregate surplus increased by $6 billion, to $181 billion, compared with a $175 billion surplus at the end of August, Marsh says. "Pension funded status for the S&P 1500 rose 1% percent in September after interest rates climbed to 17-year highs," said Marsh partner Matt McDaniel. "Persistent inflation and high energy costs kept pressure on rates, prompting the Fed to raise them by a quarter point in September." ([email protected]; @jenkayw)1323 ET - France's A+ rating is weighed down by high and rising debt and low potential growth, Fitch Ratings says. The nation is also experiencing a political and social backdrop that makes fiscal consolidation difficult, Fitch added. The country's proposed budget for 2027 "highlights the growing difficulty of reducing the fiscal deficit and stabilizing public debt amid weak growth, higher interest costs and persistent political fragmentation," Fitch says. Failing to reduce the debt could lead to a revision of the country's stable outlook to negative, Fitch says, adding "a further substantial rise in government debt could then lead to a downgrade." The latest budget proposal aims to reduce the deficit to 5% of GDP and comply with EU's net expenditure rule, Fitch says. ([email protected])1239 ET - Bitcoin's next big test is Wednesday's CPI report, says analysts with Bitfinex in a note. "The question for this week is whether Wednesday's U.S. Consumer Price Index (CPI) report changes the rate and yield outlook enough to give bitcoin room to move, and whether spot demand is there to carry it," says the firm. An upward movement in prices would potentially demonstrate improved spot demand, as would an improvement of net inflows into bitcoin ETFs, says Bitfinex. Last week was net negative for ETF flows, according to data from Coinglass — landing at a net outflow of $678.9 million. Bitcoin is down 1% to $82,816. ([email protected])0826 ET - Governments are increasingly dependent on yield-demanding private-sector investors for long-term borrowing, adding to fixed-income turbulence. "Global bond markets are adjusting to a less forgiving buyer base," TS Lombard's Alexandros Xenofontos write. They say insurers, asset managers and leveraged investors such as hedge funds are stepping into a void left by central banks. While government institutions buy and hold bonds for structural reasons, the new crop of buyers tend to purchase only when the relative value and financing cost are attractive enough. "Governments will still fund themselves, but increasingly at prices set by more discretionary investors," TS Lombard says. ([email protected]; @ptrevisani)1226 ET - Gold futures are lower with the U.S. dollar gaining and oil futures rising. Strong central bank demand and inflows into gold-backed ETFs have provided support for the metal amid shifting interest-rate expectations, geopolitical tension and global market uncertainty, says Paul Hoffman, a data analyst at BestBrokers.com, in a note. Prices have responded to changing expectations around monetary policy, movements in the U.S. dollar and shifts in investor positioning, "while September's correction demonstrated how quickly sentiment can turn even during a broader period of strong demand," he adds. Gold for December delivery is off 0.6% in New York at $4,189.30 a troy ounce. Silver is down 0.8% at $60.555 a troy ounce. ([email protected])1220 ET - Governments are increasingly dependent on yield-demanding private-sector investors for long-term borrowing, adding to fixed-income turbulence. "Global bond markets are adjusting to a less forgiving buyer base," TS Lombard's Alexandros Xenofontos write. They say insurers, asset managers and leveraged investors such as hedge funds are stepping into a void left by central banks. While government institutions buy and hold bonds for structural reasons, the new crop of buyers tend to purchase only when the relative value and financing cost are attractive enough. "Governments will still fund themselves, but increasingly at prices set by more discretionary investors," TS Lombard says. ([email protected]; @ptrevisani)1055 ET - Goldman Sachs analysts are feeling more bullish on global stocks for the short term, citing a boost from strong earnings for markets already trading near all-time highs. "Our macro baseline remains constructive: growth should stay healthy, especially for earnings, recession risk remains low, and inflation momentum should moderate into 2027," the analysts say in a note. "This combination of resilient growth and easing inflation points to more of a 'Goldilocks' backdrop, which should be more supportive for balanced portfolios." The analysts raise their three-month view on stocks to overweight from neutral, matching their positive stance over a 12-month timeline. ([email protected])1022 ET - U.S. pending home sales are down to their lowest level since spring 2014, Redfin says, with the exception of April 2020, when the onset of the pandemic ground the housing market to a halt. Pending home sales declined 4% from a month earlier in September, the biggest monthly drop in more than three years. Fewer homes went under contract in September largely because mortgage rates surpassed 7% by the end of the month. For the first time in three years, pending home sales declined in all 50 of the most populous U.S. metros. Closed home sales fell nationwide in September, declining 1.6% month-over-month. The weekly average mortgage rate climbed to 7.28% at the end of September, the highest level in three years. ([email protected])1010 ET - More than 50% of activity in tokenized equities---which are stocks converted into digital tokens--occurs outside regular U.S. market hours, giving investors across the globe access to continuous trading, according to the IMF's latest global financial stability report. "The volume outside standard hours suggests that 24/7 availability is not merely a technical feature but a source of demand," the researchers write. The IMF notes particular demand from investors in regions outside U.S. trading zones and those seeking to react immediately to news and price movements when conventional venues are closed. ([email protected])0949 ET - Bitcoin is lower, but is still holding onto the $80,000 to $84,000 range. That's even as crude oil rises, a driver for inflation and a factor making assets like bitcoin less ideal to investors looking for more secure places to invest. Bitcoin's ability to maintain these levels is a positive sign for demand, says Lacie Zhang of Bitget Wallet in a note. "Bitcoin's ability to hold above the $80,000-84,000 area while Brent trades above $100-105 [a barrel] amid renewed Middle East tensions points to growing resilience and some degree of decoupling from traditional geopolitical risk," says Zhang. Bitcoin falls 1.2% to $82,643, while ethereum slides 0.2% to $2,530 and XRP is down 1.7% to $1.39. ([email protected])