Jessica Lerner

The market is being driven by the prospect of higher long-term inflation and the potential that the Federal Reserve may have to raise rates further than expected.

DASNY leads the calendar with $2.3 billion of exempt personal income tax bonds and $662.32 million of taxables. Potential volume is slated to be $5.11 billion, with $4.392 billion of negotiated deals and $718.1 million of competitive loans.

Outflows continue but dropped significantly in the latest week with Refinitiv Lipper reporting $662 million of outflows from municipal bond mutual funds following $2.823 billion the week prior.

The Investment Company Institute on Wednesday reported another round of large outflows, this week at $3.502 billion, up from $2.647 billion of outflows in the previous week.

Secondary trading showed weaker prints, moving triple-A yields higher by three to seven basis points, outperforming larger losses in UST. California priced $2.2 billion of GOs for retail.

As municipals continue to underperform the moves in U.S. Treasuries, current ratios are attractive and present a buying opportunity.

Market volatility has risen significantly, particularly in the last several weeks, with daily Treasury yield swings of 10 basis points or more becoming the norm with municipals struggling to stabilize.

ETFs pulled in just more than $2 billion in February while muni mutual funds saw $8.5 billion of outflows.

Ongoing turmoil in the Ukraine is roiling markets, municipals included. Refinitiv Lipper reported more outflows, with high-yield seeing $818.218 million pulled out in the latest week.

In a Bond Buyer survey, 57% of participants believe issuance will be less than $475 billion. Additionally, 47% said ESG would have the greatest impact on the public finance industry in 2022.

The Russian invasion of Ukraine could slow interest rate hikes and has led the market to pull back on the chances of a 50-basis-point liftoff.

All markets, but particularly municipals, are in uncharted territory once again, with volatility amplified by the crisis in Ukraine and a still somewhat uncertain path for the Federal Reserve and inflation.

February volume was $26.481 billion in 594 deals versus $37.052 billion in 981 issues a year earlier, bringing total volume for the first two months of the year to $51.426 billion, or 20% less than 2021.

The new-issue calendar is $5.45 billion while 30-day visible supply sits at $11.14 billion. The largest deal of the week comes from the New York City Municipal Water Finance Authority with $793.83 million.

Investors yanked $1.154 billion out of municipal bond mutual funds in the latest week, Refinitiv Lipper reported.

The Investment Company Institute on Wednesday reported $3.120 billion of outflows in the week ending Feb. 16, up from $993 million of outflows in the previous week.

Between the long holiday weekend and investors trying to absorb the Russia-Ukraine developments, it was a slow start to the week in the municipal market.

As issuance hit $480.03 billion in 2021, the insurance industry wrapped 7.8%, up slightly from 7.1% in 2020. Deals with insurance totaled $37.522 billion, more than the $34.428 billion in 2020, according to Refinitiv data.

2021 comes in just shy of the all-time record in 2020, as the muni industry showed its resilience in the second year of the pandemic.

The new-issue calendar for the holiday-shortened week is $4.98 billion, with $3.633 billion of negotiated deals and $1.347 billion of competitive loans.