Your browser is unsupported

Please visit this URL to review a list of supported browsers.

ICE Fixed Income Monthly
February 2023

ICE Fixed Income Monthly Report

In this edition, a rare dynamic in the bond markets: the inverted municipal bond yield curve. Our President of Fixed Income & Data Services Amanda Hindlian explores the implications. Elsewhere in munis, our research paper examines the link between access to U.S. municipal debt and socioeconomic outcomes. And enjoy the first episode of Fixed Income in Focus, where ICE executives are joined by thought leaders in the investment and trading community.

Newsletter Archive

Sign up to our mailing list to receive the newsletter and updates from the ICE Fixed Income team

Amanda Hindlian
Amanda Hindlian
President, Fixed Income & Data Services


We’re witnessing a rare dynamic in the bond markets, which fund critical infrastructure for communities across the U.S. This dynamic has the potential to shake-up market fundamentals, and we’re watching it closely: the inverted municipal bond yield curve.

The ICE Municipal AAA yield curve inverted in December 2022 and is at a record level of inversion since ICE began tracking it in 2010. To give some idea of scope: earlier this month on February 15, the largest inversion between the 1Y and 3Y was ~52bps. Outside of that, the next highest inversion was just ~15bps on March 18, 2020 at the height of COVID fears. The current prolonged inversion is notable because unlike the inverted Treasury yield curve -- a common recession bellwether -- the muni curve rarely inverts.

So what are the implications? Muni issuers are being sidelined and new issuance projections for 2023 could be cut. This comes amid a lackluster period for the sector, with new issues falling ~20% last year -- the biggest drop in four decades. In practical terms, municipalities have seen short-term financing costs for infrastructure projects soar, with project delays seeming likely.

For market pundits, an interesting question may be whether we start to see higher correlations between Treasuries and munis. One interpretation of the current inversion is that munis have simply followed the Treasury inversion after the Fed’s historical tightening, albeit after a long delay. This dynamic could spell less opportunity to spot compelling relative value trades between Treasuries and munis, with more porous volatility contagion across both markets. Already, we’re seeing the debt ceiling debacle shake muni markets along with Treasuries. Could additional market volatility threaten the perceived safe-haven status of munis?

On the upside, munis have traditionally been immune to the kinds of market dynamics that affect broader asset classes. More predictability through increased correlation with Treasuries may not be a bad thing. Alongside this, we’re seeing electronic trading grow steadily for the sector, which supports liquidity and market participation. Notably, the advent of ETFs and Separately Managed Accounts (SMAs) has broadened the scope of individuals who access munis. Traditionally seen as a solid retirement investment, younger individuals are now recognizing the tax benefits munis offer. This shift has allowed greater institutional adoption of munis, reflected in the 200% growth we saw in institutional firms accessing our muni liquidity last year.

Fixed Income in Focus

Last year, we held our inaugural Fixed Income Forum which brought together industry leaders to talk about the latest trends and challenges in fixed income. The event also featured best practices from industry peers on finding efficiencies and automation across the front, middle and back office, as well as discussion about the regulatory landscape and the impact of ESG on fixed income investments.

We’re continuing that conversation with Fixed Income in Focus, where ICE’s senior leadership is joined by thought leaders in the investment and trading community to discuss electronification and opportunities in the fixed income markets. In the first episode, Michele Nicoleta, VP, Fixed Income Corporate Development, ICE speaks with Daniel Veiner, Co-Head of Global Trading, BlackRock on news and trends affecting fixed income markets.

Watch now

Fixed Income Trading Workflows & Cloud Technology

As hybrid work proliferates and market uncertainty lingers, accessing quality data both securely and economically is crucial. In this interview, ICE’s Director of Business Development, Larry Rorrison, shares his views on the risks that poor quality data poses to companies at the Fixed Income Leaders’ Summit.

Watch now

The link between access to U.S. municipal debt and socioeconomic outcomes

The more money you have, the cheaper borrowing tends to be. But for poorer school districts seeking to finance infrastructure, maybe that shouldn’t be the case. A study by ICE data scientists analyzed over 12,600 school districts across the US, alongside academic literature, to inform municipal bond market participants and stakeholders about how capital allocation and policy choices may impact students, school districts, and communities.

Learn more

Connect to Fixed Income Markets

Manage risk, uncover opportunities, and make informed decisions in real-time with ICE’s end-to-end fixed income solutions.

Related solutions

Best Execution Service

A statistical distribution approach for measuring bond trade execution quality, our Best Execution Service utilizes ICE’s evaluated prices to help clients monitor trading activities and to help measure trading effectiveness across the growing number of venues and protocols more closely, which can assist users with meeting regulatory obligations.

Municipal Bonds

Munis are a highly fragmented market, where data can be scarce and inconsistent. The challenges created by one million active securities, over 50,000 issuers and fewer than 1% of munis trading daily mean new ways of doing business have been a long time coming. ICE’s expertise, data and technology help connect muni market participants to new opportunities.

This material contains information that is confidential and the proprietary property and/or a trade secret of Intercontinental Exchange, Inc. and/or its affiliates (the “ICE Group”), is not to be published, reproduced, copied, modified, disclosed or used in any way without the express written consent of the ICE Group. This document is provided for informational purposes only. The information contained herein is subject to change and does not constitute any form of warranty, representation, or undertaking. Nothing herein should in any way be deemed to alter the legal rights and obligations contained in agreements between the ICE Group and its respective clients relating to any of the products or services described herein. Nothing herein is intended to constitute legal, tax, accounting, or other professional advice.

The information contained herein is provided “as is” and the ICE Group makes no warranties whatsoever, either express or implied, as to merchantability, fitness for a particular purpose, or any other matter. The ICE Group makes no representation or warranty that any data or information (including but not limited to evaluated pricing) supplied to or by it are complete or free from errors, omissions, or defects. Without limiting the foregoing, in no event shall the ICE Group have any liability for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits) in connection with any use of and/or reliance on the content of this document even if advised of the possibility of such damages.

Trading and execution services are offered through ICE Bonds Securities Corporation or ICE Bonds member FINRA, MSRB and SIPC. The information found herein, has been prepared solely for informational purposes and should not be considered investment advice, is neither an offer to sell nor a solicitation of an offer to buy any financial product(s), is intended for institutional investors only and is not intended for retail customer use.

Trading analytics available from ICE Data Pricing & Reference Data are a point in time output and as such dependent on and take into account the information available to ICE Data Pricing & Reference Data at the time of calculation. ICE Data Pricing & Reference Data does not have access to all relevant trade-related data or dealer quotes, and the utility of the output may diminish depending upon amount of available data underlying the analysis. The inputs utilized in each of the trading analytics services described herein depend on the methodologies employed by each such service and may not be the same as the inputs used in the other trading analytics services. There are many methodologies (including computer-based analytical modelling) available to calculate and determine information such as trading analytics described herein. ICE Data Pricing & Reference Data’s trading analytics may not generate results that correlate to actual outcomes, and/or actual behavior of the market, such as with regard to the purchase and sale of instruments. There may be errors or defects in ICE Data Pricing & Reference Data’s software, databases, or methodologies that may cause resultant data to be inappropriate for use for certain purposes or use cases, and/or within certain applications. Certain historical data may be subject to periodic updates over time due to recalibration processes, including, without limitation enhancement of ICE Data Pricing & Reference Data’s models and increased coverage of instruments. Although ICE Data Pricing & Reference Data may elect to update the data it uses from time to time, it has no obligation to do so.

Fixed income evaluations, continuous evaluated pricing, end-of-day evaluations, evaluated curves, model-based curves, market sentiment scores, and Fair Value Information Services related to securities are provided in the US through ICE Data Pricing & Reference Data, LLC and internationally through ICE Data Services entities in Europe and Asia Pacific. ICE Data Pricing & Reference Data, LLC is a registered investment adviser with the US Securities and Exchange Commission. Additional information about ICE Data Pricing & Reference Data, LLC is available on the SEC’s website at A copy of ICE Data Pricing & Reference Data, LLC’s Form ADV is available upon request.

Index products and services are provided by ICE Data Indices, LLC.