Company: MYI
Filing Date: 2025-04-07
Form Type: N-CSRS
Source: 0001193125-25-074486
Chunk: 1

Company: BLACKROCK MUNIYIELD QUALITY FUND III, INC.
Filing Date: 2025-04-07
Form: N-CSRS
Chunk 1
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 Used in this Report | 102 |

2

Municipal Market Overview For the Reporting Period Ended January 31, 2025

Municipal Market Conditions Volatility was heightened across fixed income markets as the Federal Reserve (“Fed”) began to ease monetary policy and the contentious election cycle ended in a Republican sweep. While front-end interest rates fell, intermediate and long-end rates surprisingly rose amid stronger than expected economic growth and fiscal deficit concerns. Municipal bonds started the year slow but rebounded as seasonals turned increasingly positive in the summer. Weakness in the fourth quarter eroded most of the gains, before a volatile but virtually flat January ended the period. The Bloomberg Municipal Bond Index returned 2.08% as high yield bonds, barbell yield curve strategies, and the Puerto Rico, IDR/PCR, and housing sectors performed best. On a relative basis, the asset class outperformed versus duration matched Treasuries.

| Bloomberg Municipal Bond Index(a)    
 Total Returns as of January 31, 2025 |         |       |
|:-------------------------------------|:--------|:------|
| 6                                    | months: | 1.05% |
| 12                                   | months: | 2.08% |

During the 12-months ended January 31, 2025, municipal bond funds experienced net inflows totaling $27 billion (based on data from the Investment Company Institute), concentrated in long-term and high yield funds. At the same time, the market absorbed $494 billion in issuance, a 35% year-over-year increase, boosted by increased borrowing needs on the back of deferred maintenance and elevated inflation as well as a pull forward of supply ahead of the
election. A Closer Look at Yields AAA Municipal Yield Curves Source: Thomson Municipal Market Data. From January 31, 2024, to January 31, 2025, yields on AAA-rated 30-year municipal bonds increased by 45 basis points (bps) from 3.52% to 3.97%, ten-year yields increased by 59 bps from 2.38% to 2.97%, five-year yields increased by 41 bps from 2.36% to 2.77%, and two-year yields increased by 3 bps from 2.64% to 2.67% (as measured by Refinitiv Municipal Market Data). As a result, the municipal yield curve steepened over the 12-month period with the spread between two- and