Munis and U.S. Treasuries richened Thursday. Equities closed higher.
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Muni yields fell by up to four basis points, depending on the scale. UST yields fell by up to four basis points, with short-term USTs seeing the biggest gains .
The muni market has displayed a “go-it-alone theme” this week, wrote Kim Olsan, senior fixed income portfolio manager for NewSquare Capital. The stalled peace talks in Iran caused a reaction in USTs and equities on Wednesday, but munis stayed firm.
“On a broad level, sentiment appears to reflect long-range optimism, though with some expected bumps along the way,” Olsan wrote. “In a pure supply-demand scenario, weekly municipal issuance averaging $11.5 billion this year (vs. the $9.1 billion average over the last five years) could arguably force higher yields and/or wider concessions. Instead, scheduled redemptions are being reinforced by substantial fund inflows.”
Fund flows
Investors added $1.416 billion into municipal bond mutual funds in the week ended Wednesday, following $2.325 billion of inflows the prior week, according to LSEG Lipper data. This is the fifth week in a row that inflows topped $1 billion.
High-yield funds saw inflows of $425.6 million compared to inflows of $311.5 million the previous week.
Tax-exempt municipal money market funds saw outflows of $1.998 billion for the week ending June 1, bringing total assets to $147.329 billion, according to the Money Fund Report, a weekly publication of EPFR.
The average seven-day simple yield for all tax-free and municipal money-market funds was 1.54%.
Taxable money-fund assets saw $89.973 billion added, bringing the total to $7.723 trillion.
The average seven-day simple yield was 3.34%.
The SIFMA Swap Index was at 2.14% on Wednesday compared to the previous week’s 1.57%.
New-issue market
In the primary market Thursday, Goldman Sachs priced for the California Community Choice Financing Authority (Aa2///) $1.197 billion of clean energy project green revenue bonds, Series 2026E, with 5s of 7/2029 at 3.15%, 5s of 2031 at 3.40% and 5s of 2035 at 3.78%, callable 4/2035..
BofA Securities priced for Charlotte, North Carolina, (Aaa/AAA//), $561.695 million of water and sewer system revenue bonds, with 5s of 7/2027 at 2.36%, 5s of 2031 at 2.62%, 5s of 2036 at 2.99%, 4s of 2041 at 3.70%, 5s of 2041 at 3.42%, 5s of 2046 at 3.88%, 5s of 2051 at 4.14% and 5s of 2056 at 4.33%, callable 7/2036.