Markets

The U.S. Treasury selloff caught up to tax-exempts with two to three basis point cuts to scales, but munis still outperform.

Municipals triple-A benchmarks continue the trend of ignoring other markets to start 2022. The new year will likely usher in slower growth and continued inflationary pressures, analysts said.

Municipal volume is estimated at $1.13 billion for the opening week of 2022. Persistently strong net supply challenges will bias credit spreads tighter, credit discipline weaker in the next few years, analysts say.

2022 volume projections are clouded by many uncertainties. What is not murky is that demand for municipals is unlikely to fade.

A HilltopSecurities survey found skilled nursing and senior living as the sectors they were most concerned about for 2022.

Net supply pressure among tax-exempts is expected to worsen in January compared to last year and the move toward richer tax-exempts is unlikely to reverse. "Dealers seem to be acknowledging this looming challenge," MMA notes.

Inflation, labor shortages and implementation uncertainties loom as the Infrastructure Investment and Jobs Act moves into center stage next year.

Investors will also receive $139 billion of interest payments in 2022, about $593 million more than in 2021, according to a report from CreditSights.

Until supply comes, market participants appear to be content to sit back and let the calendar flip to a new year without making any big moves.

Industry advocates want to preserve allocation of private activity bonds to the states and help Congress understand the benefits of advance refunding.