Segall Bryant & Hamill
February 15, 2024
Segall Bryant & Hamill leverages its proprietary investment research, deep industry experience and long‐tenured team to provide intelligently constructed portfolio solutions.

Municipal Market Update | January Eases Off Record Rally

Municipal Market Update | January 2024

The municipal bond market started 2024 by reversing some of the gains following a record two-month rally to close out 2023.

After one of the largest rallies in municipal market history, January saw a move higher in yields across the curve. January 2024 issuance was the highest issuance in the month of January since 2017.

Major Municipal Bond Index Returns (%)

Municipal & Tax Equivalent Yields

Yields across the curve experienced an upward move, however, value continues to persist in the front end and past 10 year calls.

While municipals/Treasuries remain challenging, we continue to see value in high grade municipals versus their longer duration corporate bonds.

Yield Curve

The ongoing yield curve inversion from 3 to 10 years, as seen below, suggests that a barbell strategy centered around 1 to 2 year and 12+ year maturities is increasingly appealing.

Municipal/Treasury Ratios

The wider spreads between the below data points indicates a steeper municipal curve compared to Treasuries.

Learn more about SBH’s  Municipal Strategies .

 

 

Source: All data from Bloomberg as of 1/31/23.


The  Bloomberg 1 Year (1-2) Municipal Bond Index  measures the performance of municipal bonds with time to maturity of more than one year and less than two years. The  Bloomberg 5 Year (4-6) Municipal Bond Index  measures the performance of municipal bonds with time to maturity of more than four year and less than six years. The  Bloomberg U.S. 1-15 Year Municipal Bond Index  measures the performance of USD-denominated long-term, tax-exempt bond market with maturities of 1-15 years.  An investor cannot invest directly in an index.  The  Bloomberg Taxable U.S. Aggregate Bond Index  is a broad-based fixed-income index used by bond traders.  Yield to Worst  is the lowest potential bond yield received without the issuer defaulting; it assumes the worst-case scenario, or earliest redemption possible under terms of the bond.  Duration  is a calculation of the average life of a bond (or portfolio of bonds) that is a useful measure of the bond’s price sensitivity to interest rate changes. The higher the duration number, the greater the risk and reward potential of the bond.

A basis point is a standard measure for interest rates and other percentages in finance. This update provides an overview of certain broad-based Fixed Income benchmarks and does not include performance of the Segall Bryant & Hamill Fixed Income styles.  Past performance cannot guarantee future results. All investments involve risk, including the possible loss of capital.  All opinions expressed in this material are solely the opinions of Segall Bryant & Hamill. You should not treat any opinion expressed as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of the manager’s opinions. The opinions expressed are based upon information the manager considers reliable, but completeness or accuracy is not warranted, and it should not be relied upon as such. Market conditions are subject to change at any time, and no forecast can be guaranteed. Any and all information perceived from this material does not constitute financial, legal, tax or other professional advice and is not intended as a substitute for consultation with a qualified professional. The manager’s statements and opinions are subject to change without notice, and Segall Bryant & Hamill is not under any obligation to update or correct any information provided in this material.

January 2024
SEGALL BRYANT & HAMILL
• www.sbhic.com
20
40
60
80
100
120
140
12/31/2020
1/31/2021
2/28/2021
3/31/2021
4/30/2021
5/31/2021
6/30/2021
7/31/2021
8/31/2021
9/30/2021
10/31/2021
11/30/2021
12/31/2021
1/31/2022
2/28/2022
3/31/2022
4/30/2022
5/31/2022
6/30/2022
7/31/2022
8/31/2022
9/30/2022
10/31/2022
11/30/2022
12/31/2022
1/31/2023
2/28/2023
3/31/2023
4/30/2023
5/31/2023
6/30/2023
7/31/2023
8/31/2023
9/30/2023
10/31/2023
11/30/2023
12/31/2023
1/31/2024
MAJOR MUNICIPAL BOND INDEX RETURNS
(%)
January Eases Off Record Rally
Source: All data from Bloomberg as of 1/31/24.
A basis point is a standard measure for interest rates and other percentages in finance. This update provides an overview of
certain broad
-based Fixed Income benchmarks and does not
include performance of the Segall Bryant & Hamill Fixed Income styles
. Past performance cannot guarantee future results. All investments involve risk, including the possible loss of
capital.
All opinions expressed in this material are solely the opinions of Segall Bryant & Hamill. You should not treat any opinion expr
essed as a specific inducement to make a particular
investment or follow a particular strategy, but only as an expression of the manager’s opinions. The opinions expressed are b
ase
d upon information the manager considers reliable, but
completeness or accuracy is not warranted, and it should not be relied upon as such. Market conditions are subject to change
at
any time, and no forecast can be guaranteed. Any and
all information perceived from this material does not constitute financial, legal, tax or other professional advice and is no
t i ntended as a substitute for consultation with a qualified
professional. The manager’s statements and opinions are subject to change without notice, and Segall Bryant & Hamill is not u
nde
r any obligation to update or correct any information
provided in this material.
SUMMARY
MUNICIPAL & TAX EQUIVALENT YIELDS
MUNICIPAL/TREASURY RATIOS
Yield to
Worst
Tax Adjusted Yield to
Worst (40% Tax Rate)
Duration
(years)
YTD
Return
Bloomberg 1 Year (1
-2)
Municipal Bond Index
3.10
5.17
1.33
-0.03
Bloomberg 5 Year (4
-6)
Municipal Bond Index
2.89
4.81
3.61
-0.32
Bloomberg 1
-15 Year
Municipal Bond Index
3.04
5.07
4.48
-0.39
Bloomberg Taxable U.S.
Aggregate Bond Index
3.37
N/A
6.10
-0.51
The municipal bond market started 2024 by
reversing some of the gains following a record two-
month rally to close out 2023.
After
one
of the
largest
rallies
in municipal
market
history,
January
saw
a move
higher
in yields
across
the
curve
. January
2024
issuance
was
the
highest
issuance
in the
month
of January
since
2017.
Yields across the curve experienced an upward
move, however, value continues to persist in the
front end and past 10 year calls.
While municipals/Treasuries remain challenging,
we continue to see value in high grade municipals
versus their longer duration corporate bonds.
The wider spreads between the below data points indicates a
steeper municipal curve compared to Treasuries.
30 Year AAA Muni/Treasury Ratio (%)
10 Year
3 Year
Municipal Market Update | January 2024
YIELD CURVE
The ongoing yield curve inversion from 3 to 10 years, as seen below,
suggests that a barbell strategy centered around 1 to 2 year and
12+ year maturities is increasingly appealing.
2
2.5
3
3.5
4
4.5
5
5.5
6
6.5
7
3 month
6 month
1 Year
2 Year
3 Year
4 Year
5 Year
6 Year
7 Year
8 Year
9 Year
10 Year
11 Year
12 Year
13 Year
14 Year
15 Year
16 Year
17 Year
18 Year
19 Year
20 Year
21 Year
22 Year
23 Year
24 Year
25 Year
26 Year
27 Year
28 Year
29 Year
30 Year
AA Revenue Muni (%)
AA Revenue Muni at 40% Tax Rate (%)
January 2024
SEGALL BRYANT & HAMILL
• www.sbhic.com
Strategy
Duration
Range
Description
Benchmark
Inception
Vehicle
Options
Municipal
Short Maturity
Duration:
0.5
- 2 years
Seeks to provide attractive tax
-adjusted
yield with minimal interest rate risk
through investments typically in 0
-2 year
municipal securities.
Bloomberg
Municipal
1 Year Bond
Index
11/1/2022
Separate
Account
1-10 Year
Managed
Municipal
Duration:
3 - 5 years
Seeks to maximize after
-tax total return
opportunities through investments across
the front end of the yield curve. The
strategy also seeks to provide a better
return profile than a laddered strategy,
and will generally have a higher average
credit quality and more conservative
duration.
Bloomberg
5 Year Municipal
Bond Index
1/1/2003
Separate
Account
Enhanced
Intermediate
Municipal
Duration:
4 - 6.5 years
Seeks to emphasize after
-tax total return
while preserving and enhancing capital.
The intermediate strategy utilizes active
yield curve, credit, and structure
positioning. The strategy focuses on taking
advantage of inefficiencies within
investment grade credit and bond
structures to maximize total return while
matching the interest rate risk profile of
the underlying index.
Bloomberg 1
-
15
Year Municipal
Bond Index
7/1/1991
Separate
Account
Tax
Advantaged
Municipal
Duration:
3 - 7 years
Seeks to utilize active yield curve, credit,
and structure positioning while having the
ability to tactically allocate up to 30% of
portfolios in short maturity taxable bonds.
The flexibility in this intermediate strategy
allows portfolios to potentially increase
after
-tax yields while increasing liquidity
and reducing volatility.
Bloomberg 1
-
15
Year Municipal
Bond Index
1/1/2017
Separate
Account
Municipal
Opportunities
Duration:
3 - 7 years
Bottom
-up municipal credit fund
structured to have wide enough
parameters to take advantage of
mispricing and valuation swings in the
municipal market.
Bloomberg 1
-
15
Year Municipal
Bond Index
12/16/2016
Mutual Fund
(WTTAX,
WITAX)
Colorado Tax
Free
Duration:
3 - 7 years
Bottom
-up, investment
-grade quality fund
with an intermediate maturity emphasis
that seeks double tax
-exempt income for
Colorado investors.
Bloomberg 1
-
15
Year Municipal
Bond Index
6/1/1991
Separate
Account,
Mutual Fund
(WTCOX,
WICOX)
SBH Municipal Fixed Income Platform
The
Bloomberg 1 Year (1
-2) Municipal Bond Index
measures the performance of municipal bonds with time to maturity of more than one year and less than two years. The
Bloomberg 5
Year (4
-6) Municipal Bond Index
measures the performance of municipal bonds with time to maturity of more than four year and less than six years. The
Bloomberg U.S. 1-
15 Year
Municipal Bond Index
measures the performance of USD
-denominated long
-term, tax
-exempt bond market with maturities of 1
-15 years.
An investor cannot invest directly in an index.
The
Bloomberg Taxable U.S. Aggregate Bond Index
is a broad
-based fixed
-income index used by bond traders.
Yield to Worst
is the lowest potential bond yield received without the
issuer defaulting; it assumes the worst
-case scenario, or earliest redemption possible under terms of the bond.
Duration
is a calculation of the average life of a bond (or portfolio of bonds)
that is a useful measure of the bond's price sensitivity to interest rate changes. The higher the duration number, the greater t
he risk and reward potential of the bond.
The funds of the Segall Bryant & Hamill Trust are distributed by Ultimus Fund Distributors, LLC. Separately managed accounts
are
not distributed by Ultimus Fund Distributors, LLC.
An investor should consider investment objectives, risks, charges and expenses of the Fund(s) carefully before investing. To obt
ain the prospectus that contains this and other
information about the Fund(s) please call (800) 392
-2673 or visit us online at www.sbhfunds.com. Please read the prospectus car
efully before investing.
An investment in the Funds
involves risk, including possible loss of principal.
MUTUAL FUNDS
SEPARATE ACCOUNTS
17881810
-UFD
-2/9/2024
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