Markets

The ratio of local government municipal debt to GDP in aggregate has fallen to around 10% from 20% in 2010.

The competitive sale comes as the market prepares for a very New York-heavy week next week in the primary.

For municipals, Wednesday "marks a crucial step forward, perfectly aligned with the current risk landscape," said James Pruskowski, chief investment officer for 16Rock Asset Management.

The $105 million of power project revenue refunding bonds deal for Plum Point Energy Station in Arkansas comes amid tighter emission regulations.

Fed rate cuts "should lead to positive price action for both taxable and tax-exempt bonds, and current nominal yields remain well above where they were when the Fed was more dovish, implying generous room to rally from here," said Matt Fabian, a partner at Municipal Market Analytics, Inc.

The Franklin County Convention Facilities Authority will issue $138.2 million of lease revenue anticipation refunding bonds to refund or redeem outstanding Build America Bonds.

"Given increasing student demand for charter schools, we anticipate continued strong supply issued into the municipal market," according to Nuveen.

Despite the underperformance to USTs, munis saw positive momentum during the first two weeks of September with the asset class returning 0.68% so far this month and 1.99% year-to-date.

While supply falls next week as investors await their first Fed rate cut in four years, it should pick up after the FOMC, Barclays PLC said, adding the 30-day visible pipeline "is at relatively manageable levels at the moment." Bond Buyer 30-day visible supply is at $10.09 billion.

Household ownership of individual bonds was the largest category of muni ownership at 44.6%, mutual funds at 19.2%, exchange-traded funds at 3.1% and U.S. banks at 12.4%. While not detailed in the Federal Reserve data, SMAs may hold up to $1.6 trillion currently.