Jessica Lerner

The 25-basis-point move to higher yields is the largest one-day change in triple-As since March 2020 when COVID began roiling markets. Munis could not ignore a continued selloff in UST led by inflation and recession concerns.

Ahead of the FOMC meeting, municipal issuers pull back. Investors will be greeted Monday $2.880 billion of new-issue supply.

More firms are revising issuance projections downward due to lower refunding and taxable volumes. Many participants say it is unlikely the market will hit issuance records reached in 2021 and 2020.

Refinitiv Lipper reported $2.094 billion of outflows, reversing the $1.216 billion of inflows from the mutual fund complex.

The Investment Company Institute reported investors added $1.090 billion from muni bond mutual funds in the week ending June 1, up from $4.367 billion of outflows in the previous week.

Positive momentum and supply scarcity are themes for the near future, which should bode well for the market.

The selloff in Treasuries and the continued strength of municipals have done their part to richen muni-UST ratios.

Investors will be greeted Monday with an increase in supply with the new-issue calendar estimated at $6.488 billion, led by $1 billion-plus of GOs from Maryland in the competitive market.

High-yield raked in the majority of the flows helped by Nuveen reopening two of its high-yield funds to new investors. Participants remain cautious as macroeconomic effects still hang over the market.

Municipals posted gains for the first time in 2022 in May, outperforming U.S. Treasuries on the month. The Bloomberg Muni Index posted a 1.49% return in May bringing losses down to 7.47% year to date.

June redemptions will be the highest of the year at $50.6 billion. New-issue supply — 30-day visible is currently at $15.5 billion — is unlikely to keep up.

Total May volume was $31.167 billion in 750 deals versus $35.358 billion in 1,295 issues a year earlier. In a continuing trend, new-money issuance was up 14.2% in May year-over-year.

Investors will be greeted Tuesday with a decrease in supply with the new-issue calendar estimated at $2.691 billion in $1.786 billion of negotiated deals and $904.9 million of competitive loans.

Municipals improved for the fifth session in a row with 10- and 30-year triple-A yields falling 30 basis points since Thursday. Connecticut priced $1 billion-plus of GOs and saw yields lowered in a repricing.

Several major technicals are beginning to improve in the muni market, said Burt Mulford, portfolio co-manager of fixed and strategic income at Eagle Asset Management.

Fixed-income markets have had a tough 2022 but municipal bonds have been among the ones that have struggled the most.

Given the volatility of risk assets is likely to remain high, and the focus on the flight to safety increases, all fixed-income assets could benefit as a result, including municipals, Barclays strategists say.

The Forum honored Homer Schaaf of Norton Rose Fulbright, Kym Arnone of Jefferies, and Elizabeth Fine, of counsel to New York's governor, at the first in-person dinner since 2019.

Refinitiv Lipper reported $2.712 billion of outflows, bringing the total outflows so far in 2022 to $65.8 billion, surpassing the last largest annual outflows of $63.5 billion during the Taper Tantrum in 2013.

Investors pulled $7.270 billion from muni bond mutual funds in the week ending May 11, per ICI data, while exchange-traded funds saw $1.756 billion of inflows, the fourth week of record inflows.