Finance

The New York City Transitional Finance Authority is set up to refund Build America Bonds as part of a $2.11 billion deal slated to land in the market this week.

In the summer, the market will largely move "sideways" and underperform late in the third quarter to early in the fourth quarter, "while possibly recouping most of its losses late in the year depending on the outcome of November elections," said Barclays strategists.

"Bond yields are plunging [Thursday] as rate cut expectations soar following this morning's consumer price index release, which depicted the first month of deflation since July 2022," noted José Torres, senior economist at Interactive Brokers.

Large-scale issuers, including state-level transportation authorities, counties and sales tax entities, have "planned volume to coincide with implied demand," said Kim Olsan, senior vice president of municipal bond trading at FHN Financial.

Unfunded public pension liabilities have dropped more than 60%, or $3 trillion, from the peak in 2020, according to a new Moody's Ratings report.

Overall, demand is "high," an ongoing tailwind for munis, along with solid fundamentals, Nuveen strategists said.

Competitive deals are slated to total about $2.9 billion, near the highest for any week this year, said J.P. Morgan strategists.

The short-term sale is an unusual maneuver that allows the CEA to temporarily lower the amount of available capital on its balance sheet.

The new-issue calendar rises to $9.175 billion next week, with $6.089 billion of negotiated deals coming to market and $3.086 billion of competitive deals on tap.

"The forces of municipal fundamental and technical measures are setting up a reconciliation against higher UST yields," said Kim Olsan, senior vice president of municipal bond trading at FHN Financial.