Finance

The muni market is closing out the month of June with the curve "more or less static" to where it was at the end of May, Kim Olsan wrote for NewSquare Capital.

Thursday was quiet in the muni market as many deals — which did pretty well upon pricing or selling — came to market earlier in the week, said Ron Banaszek, co-head of public finance and lead underwriter at Blaylock Van.

The continued weakening of the higher education sector means investors will have to take into account the quality of the institution.

Falling oil prices sparked a rally for Treasuries. Munis took some strength from USTs, according to Jeremy Holtz of Income Research + Management.

There wasn't any one factor driving the muni market's weaker performance, FHN's Ajay Thomas said. But investors had a lot of deals from which to choose.

SWBC's Chris Brigati said he expects munis to continue to outperform Treasuries, unless USTs aggressively sell off.

Market Intelligence analyst Jeff Lipton explains why constrained state budgets should not be mistaken for broad credit deterioration, pointing to rainy-day funds, revenue diversity, low debt burdens and strong debt-service protections as key stabilizers.

The market outlook is mixed, according to Barclays strategists.

The FOMC's hawkish tone hasn't cost munis yet, but the reaction from USTs may bring pressure, according to NewSquare Capital's Kim Olsan.

Favorable conditions for munis helped the asset class stay afloat, despite a hawkish FOMC.

Munis were little changed, but geopolitical and market conditions could bode well for the sector, MMA's Matt Fabian said.

Investors want to see what happens with the Fed and the Iran peace deal before they react, said Schwab's Cooper Howard.

Market Intelligence analyst Jeff Lipton maps where credit remains stable and where caution is warranted in his mid-year scorecard, flagging pressure points in higher education, K-12, tobacco and parts of local government while outlining the structural strengths supporting states, airports and other essential-service sectors.

Supply has been robust in June but issuance falls to an estimated $8.137 billion this week.

There has been some "capitulation" in munis lately. The asset class was outperforming USTs until very recently, said Chris Brigati, managing director and CIO at SWBC.

Many factors impact the performance of munis, and, this year, everything seems to be working for the positive.

Muni yields were cut up to five basis points Thursday, depending on the scale, after yields rose up to two basis points the day prior.

Local governments will face "greater credit pressure" if voters largely eliminate property taxes on more than half of homes in the state, S&P analysts said.

The initial reaction following the CPI report didn't "move the needle" in the bond market, as the 10-year UST yield was just over 4.5%, said Jay Woods, chief market strategist at Freedom Capital Markets.

Volume was robust last week, with a nearly $20 billion new-issue calendar, and while supply dips to $13 billion this week, it will end up higher thanks to four sizable prepay energy deals that priced on Monday and Tuesday.