"Yields to Remain Suppressed Even After the Fed Unwinds"
In this month’s Municipal Strategy we discuss the factors that will partially suppress any potential rise in interest rates as the Fed continues to taper. With the economy suffering from some degree of “secular stagnation,” the rise in interest rates relative to the increase in GDP will likely be less than in previous periods of increasing interest rates. Specifically “excess savings,” substantial central bank liquidity, low risk premiums and falling debt issuance across most domestic US bond markets will provide some additional restraint on any impulses for rising rates.
We continue our discussion of how hospitals are coping in the new world of the ACA by examining physician recruitment data geographically. Physician recruitment remains a major problem for hospitals, particularly with the changing preferences of young physicians.
We make some preliminary observations about airport leverage, revenue growth, and issuance from our database of airport statistics. Airport revenue growth has been slower the growth in the economy. Airports are an essential part of the urban economic environment, making the ability to sustain revenue growth and finance infrastructure development an important factor in long term credit quality.