Christine Albano

Non-farm payrolls rose 916,000 in March, according to a Labor Department report Friday, while the unemployment rate fell to 6%.

Biden's $2 trillion infrastructure proposal, combined with the shortened week and the arrival of the second quarter, took attention away from the muni market.

Larger fund flows, lower supply and optimism surrounding issuer credit post-stimulus allowed for a March price reversal that avoids posting two consecutive months with losses. The consumer confidence index jumped to its highest reading in a year in March.

Municipals continue to outperform Treasuries amid a light holiday-shortened week led by a California tobacco deal.

A trio of municipal bond analysts say now is the time for investors to take advantage of the strength and resilience of the asset class.

Refinitiv Lipper reported more inflows into municipal bond mutual funds to the tune of $592.4 million. Initial jobless claims fell to the lowest point since the pandemic began, moving Treasuries weaker while equities saw gains.

Monday’s economic data suggested weakness, with existing home sales declining for the first time in four months and the Federal Reserve Bank of Chicago’s National Activity Index slipping into negative territory, but economists are not concerned.

A reversal of fund flows and the arrival of the economic aid for states and local governments helped boost the market's morale ahead of $10 billion in new-issues supply this week.

Municipals largely ignored the moves to higher yields in U.S. Treasuries as participants await the largest new-issue calendar of 2021 and big-name deals out of New York and Illinois.

The Investment Company Institute reported outflows from municipal bond mutual funds but inflows into exchange-traded funds. The February consumer price index came in as expected, while the core was below expectations, and analysts expect bigger rises ahead.

Munis were stronger across the curve as secondary trading was constructive and bellwether credits moved yields lower.

Despite the recent outflows and volatility of the Treasury market, municipal bonds have and should continue to outperform as stimulus from Washington provides some respite.

With the reset in yields in the rear view, valuations — especially relative to Treasury — will likely support continued robust demand.

Knox was a public finance lawyer and former partner at Orrick who aided the cities of Vallejo and Stockton through bankruptcy.

Holzinger's career in finance spanned 30 years and included attorney, investment banking, bond insurance, and consulting.

The market took a much-needed breather Friday and U.S. Treasuries pared Thursday's losses to see the 10-year fall 12 basis points to 1.42% and the 30-year 17 basis points to 2.11%. Municipals were steady at 1.14% in 10 years and 1.82% in 30.

High-grade deals priced and secondary trading showed bonds exchanging hands at yields higher than triple-A benchmarks in some cases, but a healthy two-way flow was evident, even if there are signals that yields have not yet hit a ceiling.

Muni yields rose another five basis points on the 10- and 30-year, bringing the total cuts to scales to 18 and 17 basis points, respectively, from Tuesday as the asset class moved closer to UST movements after lagging that market since the start of the year.

Muni yields have climbed double-digit basis points in a week but technicals remain strong. Refinitiv Lipper reports $1.96 billion of inflows into municipal bond mutual funds.

With the U.S. Treasury sell off, municipal to UST ratios fell below 55% in 10-years.