The muni market strengthened on Monday morning, following Treasuries.
Bonds in the intermediate to long end of the curve, maturities from six to 30 years, saw yields fall by as much as two basis points, according to Municipal Market Data's triple-A scale. The front end of the curve held steady.
Intermediate and long Treasuries' yields also declined, with the 30-year and 10-year's each dropping by six basis points to 3.16% and 2.48%, respectively. The two-year notes' yield held steady at 0.59%.
Treasuries began falling last week as tensions in the Middle East worsened after President Barak Obama ordered an airstrike on Islamic extremists in Syria on the 23rd. President Obama then said in a speech to the United Nations on the 24th the U.S. military would work with allies to dismantle the Islamic State's "network of death."
Traders told The Bond Buyer the president's more aggressive approach to the situation with ISIS would cause investors to flee to "safe haven" Treasuries, making the notes strengthen. They also predicted this strength would bleed into the municipal market.
Fund Flows Increase by Nearly 200%
Inflows for all municipal bond funds increased by nearly 200% for the week ending September 24, according to Lipper FMI.
Inflows totaled $588.77 million last week, up from $196.57 million the previous week.
Assets of all weekly reporting municipal funds rose to $310.5 billion from $309.4 billion the week before. The four-week moving average inflow rose to $408.86 million from $373.4 million.
Inflows for long-term muni funds jumped too, rising to $324.2 million from $94.3 million previously.
Long-term municipal mutual fund assets rose to $162.8 billion from $161.9 billion last week. The four-week moving average of the long-term fund was an inflow of $172.65 million, up from $163.7 million last week.
High yield fund inflows grew to $261.82 million from $101.1 million the week before. Assets increased to $468.5 billion from $464.3 billion. The four-week moving average was $175.7 million, up from $167.7 million.
Primary Market
No information on deals over $100 million were available, according to data provided by Ipreo.
Scales
Municipal scales strengthened in the intermediate and long end in morning trading session on Monday as of 10:48 a.m., according TM3. Bonds maturing between 2015 and 2019 were steady, as those maturing between 2020 and 2044 tightened up to two basis points, according to the Municipal Market Data's triple-A 5% curve provided by TM3.
