How will the bond market hold up against the one-two punch of Irma and Harvey?

Author: , Post Date: September 10, 2017

Investors are wondering how the bond market will handle the one-two punch of Hurricane Harvey and Hurricane Irma.

Some market participants expect the economic impact of the devastation to take a third Federal Reserve rate increase off the table for this year by slowing down the pace of inflation. Others have argued credits for municipalities hurt by the hurricanes may suffer a drop in their ratings, or at least a perceived drop in their ability to pay their debts.

To answer the question, John Mousseau of Cumberland Advisors and his colleague Gabriel Hament tested how bond yields reacted in the wake of hurricanes over the past 30 years. To do this, they tracked the 12 most destructive storms during that stretch and tracked how the U.S. 10-year Treasury note yield and the Moody’s municipal bond yield, a gauge of the average yield for high-grade municipal bonds, changed after landfall. TMUBMUSD10Y, +1.64%

Read the original piece referenced here or the rest of the article at the Market Watch Website.

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