Markets

Market Intelligence analyst Jeff Lipton recaps May's muni outperformance versus Treasuries and broad fixed income, highlighting how carry, reinvestment demand and spread compression drove strong returns and helped A3 and Baa credits lead the market.

On the primary market, some deals are oversubscribed and others sent back to the drawing board.

"On a broad level, sentiment appears to reflect long-range optimism, though with some expected bumps along the way," NewSquare Capital's Kim Olsan wrote.

The Nassau County Tobacco Settlement Corp's ability to continue as a going concern depends on restructuring its tobacco debt, the county's audit said.

The revenue bonds would continue financing for a 15-year, $8.2 billion program to widen existing toll roads and build new ones.

"A lot of retail investors are still very distracted by the stock market," said Pat Luby, head of municipal strategy at CreditSights.

With nearly $4.5 billion of tax-exempt bonds, a restructuring or bankruptcy would be among the muni market's largest to date.

Investors most recently added $2.33 billion to mutual funds for the week ending May 27, bringing positive flows to date to almost $40 billion, according to LSEG Lipper.

S&P lifted Graham's general obligation bond and certificates of obligation rating to A from BBB due to the city's earlier-than-projected financial turnaround.

The status of the war in Iran is confusing, Hennion & Walsh's James Pruskowski said, but high absolute rates are giving the muni market a strong start to June.