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If the present rate of long-term municipal issuance continues, total sales are projected to hit around $350 billion for this year, indicating a second consecutive year of falling issuance. The strategists had initially anticipated $500 billion in sales in October 2022 but revised it down to $400 billion due to the Federal Reserve’s unforeseen continuation of interest rate hikes.
For 2024, they anticipate approximately $300 billion in bond sales for new projects and an additional $100 billion to refinance higher interest-rate debt. A rally in the municipal market is expected when the Federal Reserve shifts from tightening to easing in 2024, which would affect the volume of refinancing.
The strategists also foresee low GDP growth for the next year. Despite these projections, it is important to note that market conditions can change rapidly and these predictions are based on current economic indicators.
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