Gary Siegel

The January employment report headline number disappointed while stimulus news lifted equities and U.S. Treasuries rose on both counts. Municipals ignored those moves ahead of another week of less-than-ample supply.

No rate hikes in sight as employment continues to struggle and inflation should rise this year, but not enough to force the Fed to raise rates.

ICI reports a third week of $3-plus billion of inflows. Couponing is becoming as much a factor in inquiry as credit and issuers move to lower coupons in both competitive and negotiated deals.

Rich ratios focus buyers' eyes on a primary market that simply doesn't have enough supply to keep up with demand.

It is most certainly an issuers' market as rates are low, credit spreads continue to tighten, money pours into municipal bond mutual funds at record levels and a net negative supply of more than $11 billion.

Chicago Board of Education bonds were repriced to lower yields by as much as 37 basis points, showing just how far investors will go for any incremental yield.

Fed chair says it's unlikely there will be "troubling inflation" any time soon, and rates will stay low and asset purchases will continue at current levels. ICI reports another $3.24 billion of inflows as munis follow UST to lower yields.

New issues priced with ease with high-grade issuers tight to triple-A benchmarks. It was the first time the municipal yield curve saw such noticeable movement, following little changed secondary activity for nearly the past two weeks.

Returns of all the investment grade options "pale in comparison to those for municipal high-yield," which should bolster Texas gas and Chicago public schools deals.

Refinitiv Lipper reports another multi-billion week of inflows, the domino effect from such strong flows is that secondary selling doesn’t need to be so active, creating fewer opportunities for new inquiry, analysts say.

Tax-exempt performance is dependent on what supply looks like versus taxables. The 30-day visible supply shows more than 30% taxables on tap, though some analysts say the taxable increase makes exempts more attractive.

Friday’s data showed economic weakness. Consumers, the drivers of the economy, pulled back during the holiday season and have exhibited weakening sentiment.

Powell, speaking on a livestreamed event, said interest rates will be raised "no time soon" and there will be plenty of notice "well in advance of active consideration."

KC Mathews, executive vice president & chief investment officer at UMB Bank, discusses how the coronavirus pandemic has affected the economy and what he expects going forward. He speaks about what the incoming Biden administration and the Democrats' control of Congress will mean for the economy; and the Federal Reserve's stance and role in recovery. Gary Siegel hosts. (Recorded Jan. 7; 28 minutes)

Municipal bonds continue to ignore UST and ICI reports $2.67 billion of inflows. While CPI should stay soft through the first quarter, expectations for future inflation should be considered.

The employment report showed 140,000 decline in nonfarm payrolls in December, but economists found some positives in the numbers.

It was inevitable that muni yields would need to rise somewhat as the UST 10-year broke above 1%, however participants said the supply/demand imbalance will keep munis from rising as quickly as Treasuries. More than $1 billion inflows reported.

FOMC members backed maintaining asset purchases, although “a couple” were “open” to “weighting purchases of Treasury securities toward longer maturities,” according to minutes released Wednesday.

Without the benefit of a larger new-issue calendar, secondary trading is likely to continue the theme of the final two months of 2020: more bidders than bonds.

Federal Reserve Bank of Chicago President Charles Evans says monetary policy will need to remain “accommodative for quite a while,” since inflation won’t hit a 2% average for “a long time.”