Gary Siegel

Outflows continued, rising significantly in the latest week, with Refinitiv Lipper reporting $2.136 billion coming out of municipal bond mutual funds, following outflows of $661.675 billion in the previous week.

The Investment Company Institute on Wednesday reported $2.258 billion of outflows in the week ending March 9, down from $3.502 billion of outflows in the previous week.

Bond investors are understandably cautious in response to recent market volatility and ahead of what is expected to be a Fed rate hike Wednesday, participants say.

The market is being driven by the prospect of higher long-term inflation and the potential that the Federal Reserve may have to raise rates further than expected.

DASNY leads the calendar with $2.3 billion of exempt personal income tax bonds and $662.32 million of taxables. Potential volume is slated to be $5.11 billion, with $4.392 billion of negotiated deals and $718.1 million of competitive loans.

Outflows continue but dropped significantly in the latest week with Refinitiv Lipper reporting $662 million of outflows from municipal bond mutual funds following $2.823 billion the week prior.

The Investment Company Institute on Wednesday reported another round of large outflows, this week at $3.502 billion, up from $2.647 billion of outflows in the previous week.

Secondary trading showed weaker prints, moving triple-A yields higher by three to seven basis points, outperforming larger losses in UST. California priced $2.2 billion of GOs for retail.

Market volatility has risen significantly, particularly in the last several weeks, with daily Treasury yield swings of 10 basis points or more becoming the norm with municipals struggling to stabilize.

Ongoing turmoil in the Ukraine is roiling markets, municipals included. Refinitiv Lipper reported more outflows, with high-yield seeing $818.218 million pulled out in the latest week.

The Investment Company Institute on Wednesday reported $2.637 billion of outflows in the week ending Feb. 23, down from $3.120 billion of outflows in the previous week.

The Russian invasion of Ukraine could slow interest rate hikes and has led the market to pull back on the chances of a 50-basis-point liftoff.

All markets, but particularly municipals, are in uncharted territory once again, with volatility amplified by the crisis in Ukraine and a still somewhat uncertain path for the Federal Reserve and inflation.

Between the long holiday weekend and investors trying to absorb the Russia-Ukraine developments, it was a slow start to the week in the municipal market.

The new-issue calendar for the holiday-shortened week is $4.98 billion, with $3.633 billion of negotiated deals and $1.347 billion of competitive loans.

Refinitiv Lipper reported outflows after inflows of $216 million the previous week.

Rates could go up faster than they did in 2015 if predictions for the economy hold, minutes from the FOMC said, but the release offered no hints as to whether a 50 basis point liftoff would be considered.

Municipal bonds' relative value has increased dramatically as rates have risen and credit fundamentals have improved, with municipal-to-Treasury ratios now on par with their five-year averages.

Inflation remains under market scrutiny, with Monday’s data suggesting consumers expect price pressures to cool later this year.

Municipal yields rose up to 10 basis points on the short end, playing catch up to the volatility of Treasuries' moves on Thursday. Rising UST rates will inevitably be more significant for munis until they settle into more stable levels.