Jessica Lerner

Investors will be greeted Monday with a decrease in supply with the new-issue calendar estimated at $6.711 billion, down from total sales of $10.318 billion.

Investors pulled $229.263 million out of muni bond mutual funds in the latest week, versus the $635.177 million of outflows the prior week, according to Refinitiv Lipper. High-yield continues to see inflows.

The short end was hammered in the secondary with large blocks of high-grades showing big swings to higher yields while the rest of the curve wasn't spared the damage and triple-A yields rose by seven to 16 basis points.

It was a busy day in the primary Tuesday, with New York City pricing $950 million of GOs for retail and Miami-Dade County, Florida, and Mecklenburg County, North Carolina, selling in the competitive market.

"Demand for low-duration tax-exempts has been so strong that short maturity benchmark yields are now lower than the after-tax yields for comparably rated benchmark taxable muni and corporate bonds," said CreditSights strategists Pat Luby and John Ceffalio.

Total volume in the first half of the year was at $209.718 billion in 5,153 deals, down 11.2% from the $235.836 billion in 6,793 over the same period in 2021, according to Refinitiv data.

The two main insurers, Assured Guaranty Municipal Corp. and Build America Mutual, accounted for $17.132 billion of deals in the first two quarters compared to $18.794 billion a year earlier.

Investors will be greeted Monday with an increase in supply with the new-issue calendar estimated at $5.941 billion, up from total sales of $1.700 billion.

Investors poured $1.094 billion into municipal bond mutual funds in the latest week, versus the $236.491 million of inflows the week prior. It marks only the second time this year inflows eclipsed $1 billion.

The Investment Company Institute reported investors pulled $246 million out of muni bond mutual funds in the week ending July 27 compared to the $602 million of outflows in the previous week.

The large primary was led by two $700-plus million of revenue bonds from the Port of Seattle and the Georgia Ports Authority.

Summer redemption season starts winding down; Net negative supply stands at $18.777 while 30-day visible is at $12-plus billion.

Municipals will end July with positive returns across all sectors. The Bloomberg Municipal Index shows a 2.49% return in July, moving year-to-date losses lower to 6.71%.

Total July volume was $25.598 billion in 520 deals versus $37.573 billion in 1,013 issues a year earlier, according to Refinitiv data.

Investors added $236.491 million to municipal bond mutual funds, per Refinitiv Lipper data, versus the $698.782 million of outflows the week prior. High-yield saw inflows hit nearly $550 million.

Municipals are poised to end July in the black. Demand for muni product has been strong this summer, with analysts expecting supportive market technicals through August with a likely continuation of positive performance.

With the Fed committed to fighting inflation with aggressive rate hikes, fewer issuers want to take the risk with taxable advance refundings.

Investors sit on the sidelines, waiting to see how much the Fed will hike rates. The consensus appears to be another 75 basis point rate hike, though a full point hike could be on the table.

Only two firms remained in the same spot at this point last year: Orrick Herrington & Sutcliffe and Norton Rose Fulbright.

With the Fed rate decision coming this week, issuers are sitting on the sidelines in both primary and secondary Monday with little changed yield curves.