Markets

Fitch joined S&P Global Ratings in assigning a gilt-edged rating to the city, ahead of a planned general obligation deal later this month.

Economists remain guarded about the island's economic future.

Municipals followed U.S. Treasuries firmer after markets reacted to the Moody's downgrade of several mid-sized U.S. banks. New issues saw good demand and repriced to lower yields as a result.

While triple-As were little changed the past two sessions, some damage was done last week, leaving market participants generally less optimistic for the final weeks of August.

Moody's Investors Service upgraded the Connecticut capital city's issuer rating to Baa3 from Ba2.

Late summer is "rarely a good time for our asset class," Barclays strategists said, noting the municipal investment grade index lost money in August three years in a row, and 2023 seems to follow this trend.

"The limited scope of muni debt affected suggests a marginal impact on the muni market, if any," BofA strategists said.

The Tennessee Valley Authority has $19 billion of outstanding bonds and provides power to 10 million people.

Though the city has vast financial strengths, it is struggling with the costs of housing migrants and declining commercial property values.

Municipal bond mutual fund saw outflows return with Refinitiv Lipper reporting investors pulling $989.852 billion from funds for the week ending Wednesday, led by ETFs and long-end funds.