Muni saw gains Wednesday after a two-day selloff, as U.S. Treasuries richened and equities ended higher.
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Munis were up by up to four basis points firmer on Wednesday. UST yields richened by one to 10 basis points, with the largest gains out long.
The market movements of the week aren’t unfamiliar, said Chad Farrington, co-head of municipal bond investment strategy at DWS; it’s a pattern for munis to sell off for a couple days, then swing the other way. Heading into fall, when demand is typically weaker, the market is predisposed to have more weeks of weakness.
On Wednesday, “with Treasuries up quite a bit, there was just a better tone in the market,” Farrington said. “We’ve seen the new deals that were pricing do really well, so just kind of a complete 180 from how the market felt the last couple [of] days.”
ICI data
The Investment Company Institute reported Wednesday inflows of $1.54 billion for the week ending Aug. 12, following $41 million of outflows the previous week.
Exchange-traded funds saw inflows of $477 million after $1.53 billion of inflows the week prior, per ICI data.
New-issue market
In the primary market Wednesday, Loop Capital Markets preliminarily priced for the New York City Transitional Finance Authority (Aa1/AAA/AAA/) $1.5 billion of future tax secured subordinate bonds, Subseries 2027B-2, with 5s of 2027 at 2.58%, 5s of 2031 at 3.08%, 5s of 2041 at 4.26%, 5.25s of 2046 at 4.57%, 5.5s of 2052 at 4.80% and 5.5s of 2054 at 4.86%.
BofA Securities priced for the Los Angeles County Metropolitan Transportation Authority (Baa2//BBB-/) $509.15 million of I-105 Express Lanes Project toll revenue first lien bonds, with 5s of 6/2034 at 3.45%, 5s of 2036 at 3.65%, 5s of 2041 at 4.23%, 5s of 2046 at 4.54%, 5.5s of 2051 at 4.74%, 5s of 2056 at 4.93% and 5.25s of 2056 at 4.88%, callable 6/2036.
In the competitive market, the New York City TFA (Aa1/AAA/AAA/) sold to J.P. Morgan $415 million of taxable future tax-secured subordinate bonds, Subseries 2027B-2, with 4.74s of 11/2031, 4.95s of 2033 and 5.29s of 2039, all priced at par, callable 11/2036.