Gary Siegel

Municipals are sitting out the ups and downs in equities and UST, with $12 million scheduled for the primary in the final week of 2021.

Tax risks continue to linger as they are preserved as a potential offset for whatever level of spending all 50 Democratic senators can agree to, but potential approval of the legislation remains a question mark.

The Build Back Better in its current form essentially has been killed by Sen. Joe Manchin, likely limiting the potential for tax hikes in the coming year.

Despite outside pressures, municipal fundamentals are strong with improving credit pictures, issuers flush with federal cash and the ongoing supply-demand imbalance.

It marked the 40th straight week of positive flows into the long-term funds and brought the total inflows for this year near $82 billion. Exchanged-traded funds saw $168M of inflows.

Triple-A yield curves were unchanged on the day and mostly have not budged but a basis point in spots since the end of November.

Coming off last week's $19.5 million influx of weekly new issues, supply this week is lower as the market watches the Federal Open Market Committee meeting.

The Investment Company Institute reported $289 million of inflows into municipal bond mutual funds in the week ending Dec. 1, down from $965 million in the previous week.

Thirty-day visible supply drops to $13.54 billion with still a large chunk of new issues to be priced Wednesday and Thursday.

The municipal market is poised to absorb the late-year burst of supply as market technicals are expected to remain positive through year end.