Gary Siegel

Most bond issues appear to be approved, but many were rejected.

The FOMC will likely take the opportunity to profess its reliance on data to decide liftoff and reiterate the threshold for a rate hike remains higher than for taper.

Though monetary policy has been in the forefront, at mid-month the tone changed with global inflation outlooks and federal infrastructure and social package in flux.

A lighter, $5 billion calendar, heavy on healthcare, kicks off November. Most participants agree volatility in U.S. Treasuries will be a leading factor for municipal market performance. Uncertainty in Washington also isn't helping the asset class.

Amid a flattening municipal yield curve and inversion of the Treasury market, new issues fared better than the secondary on Thursday as participants prepared for month end.

ICI reported the lowest inflows since outflows in March, while exchanged-traded funds saw an uptick.

As of now, returns for the month will very likely end in the red. The Bloomberg U.S. Municipal Index is at -0.40% for the month and +0.39% for the year.

Jeffrey Cleveland, chief economist at Payden & Rygel, discusses the Federal Reserve’s upcoming meeting, inflation, what taper will mean, when the Fed might decide to lift off, and possible leadership changes. Gary Siegel hosts. (30 minutes)

Despite a short-end U.S. Treasury rally, municipals face pressure on the one- and two-year as participants look to month-end positioning.

Municipal bond mutual fund inflows fell to $177 million while high-yield is back to outflows, both signaling selling may be moving the market toward another larger correction.

The Investment Company Institute reported $385 million of inflows while ETFs fell to $124 million.

Spreads have been widening, but secondary trading was on the light side and triple-A benchmarks were cut by only a basis point in spots even as U.S. Treasury yields once again rose on the 10- and 30-year.

Triple-A benchmarks saw one basis point cuts in spots inside 10 years while the five-year U.S. Treasury hit a high of 1.154%.

Friday’s data suggested inflation remains a problem, as the voices calling for Federal Reserve action increase.

Municipals have mostly held steady as bid-wanteds have risen, but so have yields and ratios, making for a more satisfactory range for investors getting into the market at these new higher levels.

Another round of inflows was reported from the Investment Company Institute — the 31st consecutive week — but they came in at $308 million for the week ending Oct. 6, the lowest since outflows in March.

Volatility in the U.S. Treasury market continues to pull on municipal bond valuations, despite little trading volume.

Municipals outperformed the move in taxables Friday but weakness hangs over the market as fund flows lessen and supply increases. Taxable munis may be keeping exempt rates from moving higher.

For 31 consecutive weeks investors put cash into municipal bond mutual funds but saw just $36.87 million of inflows in the latest reporting period while high-yield funds saw $460 million of outflows after $103 million of outflows a week prior.

ICI reported $704 million of inflows, a $1.1 billion drop from the week prior, bringing the total to $76 billion year to date.