美股投资策略-22年下半年市政市场展望

North America Fixed Income Strategy24 June 2022 2H22 Municipal Market OutlookUS Fixed Income StrategyPeter DeGroot AC(1-212) 834-7293peter.degroot@jpmorgan.comYe Tian(1-212) 834-3051ye.tian@jpmorgan.comSabrina Spatz(1-212) 834-5479sabrina.spatz@jpmorgan.comJ.P. Morgan Securities LLCSee page 40 for analyst certification and important disclosures.www.jpmorganmarkets.com In 2H22, the unstable US rate backdrop is expected to persist as markets digest the efficacy of Fed actions and impacts on the economy, while further exacerbated by impaired UST market liquidity. Amidst expected rate volatility, we suggest a buy the dip mentality, as rate dependent outflows drive a feast or famine narrative  We recommend staying relatively close to benchmarks/peer compositions, while overweight in cheaper 3-4% coupons, airports, New York, AMT, Hosp & HSG. Also stay with short-calls, and short-intermediate spread product JPM forecasts a Fed Funds terminal rate of 3.25-3.50%, by Feb. of 2023. We forecast 50bps hikes in July and Sept., followed by a 25bps cadence until that range is reached. This is similar to `consensus of a 3.60% terminal rate in 1Q23 By year-end, UST yields are expected to rise by 55-43-38-20bps, while muni AAA rates are expected to rise by 43-24-21-15bps in 2-5-10-30yrs, respectively  Our baseline total return forecast for generic 5% AA 10-year call structure, shows an average total return across the curve of 54bps. With relative flat returns across the curve, we expect top performance in 8yrs and shorter, with an average return of ~75bps. With 30yr AA 5% structure expected to produce only 20bps more total return vs. the 10-20yr area of the curve, we don’t think the extra curve exposure is worth the risk of an inflation overshoot We like long 4’s for their positive convexity versus generic 5’s. Firstly, long 4’s carry ~50bps better than 5’s in a neutral rate environment. In scenarios where AAA HG rates rise and fall 50bps, we expect 4% coupon bonds would outperform Many of the longer dated 4’s are trading at comparable nominal yields to similar structure corporate bonds. These spread sectors are expected to outperform over time including NY (+111bps), HSP (+118bps), HSG (+120bps), and Airport (+132bps) bonds. Spreads in these sectors are near or above their pandemic highs Municipal market depth across the curve is expected to be bifurcated, with far better liquidity inside of 10yrs and progressively improving towards the shortest portions of the curve. Current extremely cheap long-end muni valuations against a backdrop of limited supply and large reinvestment is typically a good setup for the tax-exempt market We project lower gross issuance of $444bn, down 10% versus full-year 2021($491bn), and 1% lower vs. the 5yr avg ($448bn). Despite manageable issuance, we remain cautious given expected volatile rate and flow environment  We look for continued strength in tax collections in 2H22, providing financial flexibility