Jessica Lerner

Valuations look increasingly attractive relative to other fixed income asset classes, even as rising interest rates continue to weigh on the market, strategists say.

Outflows continue with the Investment Company Institute reporting $6.167 billion pulled from muni bond mutual funds in the week ending May 4, up from $5.371 billion of outflows in the previous week. 

New York Dormitory Authority school bonds and Northwell Health priced and upsized, while Wisconsin and Oregon offered general obligation bonds. Analysts say municipal curves are oversold, creating a buying opportunity.

Despite outsized volatility and liquidity challenges ahead, the possibility of relief for munis is not too far off, analysts say, but USTs lead the way for exempts.

Munis again outperformed U.S. Treasuries. Participants note that municipal to Treasury ratios and nominal yield levels are “extremely attractive,” which is generating some renewed interest among the retail crowd.

Investors pulled more from municipal bond mutual funds in the latest week, with Refinitiv Lipper reporting $2.669 billion of outflows, though down from $2.875 billion of outflows in the previous week.

Outflows continue with the Investment Company Institute reporting $5.371 billion pulled from muni bond mutual funds in the week ending April 27. Exchange-traded funds saw inflows at $1 billion.

The municipal market was marked by some skittishness among investors on Tuesday as a new month gets underway.

Municipal returns in April were deeply negative, bringing the year-to-date figure to near 9% losses, the largest posted on the Bloomberg Muni Index since its inception in the 1980s.

Investors will be greeted Monday with a steep drop in volume, with the new-issue calendar estimated at $4.583 billion — less than half of this week's supply.

Total April volume was $34.329 billion in 729 deals versus $37.105 billion in 1,124 issues a year earlier.

Investors pulled more from municipal bond mutual funds in the latest week, with Refinitiv Lipper reporting $2.875 billion of outflows, down from $3.548 billion of outflows in the previous week.

In the week ending April 13, investors pulled $5.526 billion from the funds, down from $7.227 billion of outflows in the previous week, ICI reported.

Relative cheapness, wider spreads and underperformance in munis are providing better value, all set against a very solid and resilient credit background, analysts say, but supply is testing investor sentiment amid volatility.

Another swing in U.S. Treasury market pushes muni to UST ratios out long even cheaper.

The new-issue calendar tops $9 billion led by $3 billion taxable and tax-exempts from University of California Regents, a $1 billion plus healthcare deal from Michigan and $1.35 billion of GOs from Washington State.

Investors pulled more from municipal bond mutual funds in the latest week, with Refinitiv Lipper reporting $3.548 billion of outflows, down from $4.106 billion of outflows in the previous week.

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The Investment Company Institute reported investors pulled $7.2 billion from municipal bond mutual funds, the largest figure since the outlier months of March 2020 when investors yanked $24 billion in two weeks.

The two active municipal bond insurers wrapped $8.176 billion in the first quarter of 2022, a 3.25% decrease from the $8.442 billion of deals done in the first three months of 2021.