Two themes dominated financial headlines in 2018: economic growth and interest rates. What’s interesting is how context and time can change the conversation around these themes. As we roll into 2019, both economic growth and interest rates are at a turning point.

Economic growth was substantial in 2018 with one of the most robust expansionary periods in recent U.S. history, though sentiment around the general economy seems to have turned quickly. Will this year see the end of this expansionary period? Will it see the start of a recession?

2019 interest rate expectations changed dramatically in the last months of 2018. Experts predicted additional increases in the federal funds rate, but now forecast none. Some experts think we may even see rates decline in 2019.

In 2018, the municipal market saw the lowest issuance volume since 2013. The dominant cause of this drop was the elimination of advance refundings, which have not been this low since 2002, and we expect 2019’s volume to follow suit. However, 2020 and beyond should see growth as a significant number of deals become refundable. Last year was a solid year for bond elections once again, and with long-term interest rates still very low, new money issuance should be strong.

This year is stacking up to be full of possibilities and challenges for municipal issuers, and we take great pride in being able to help advance communities across the nation. Yet, to understand the year ahead of us, it’s important to look at the one that came before. We have compiled this Municipal Finance Year in Review to help you do just that, and we hope you find it useful.


David Medanich
Vice Chairman
Head of Public Finance
Hilltop Securities Inc.