Munis were little changed on Thursday. U.S. Treasuries cheapened and equities ended lower as a deal to reopen the Strait of Hormuz seemed further away.
Muni yields richened by up to one basis point. UST yields were three to six basis points weaker.
"The rates market is turning around under a mix of macroeconomic and geopolitical cross-currents," said James Pruskowski, managing director at Hennion & Walsh. Chief among the cross-currents is Iran's plan to
UST investors are also making room for nonfarm payroll data scheduled for release Friday, a worsening fiscal deficit, and continued uncertainty about Fed policy, Pruskowski said.
Muni yields were impervious to these concerns on Thursday, Pruskowski said. The market was "taking a bit of a breather" after a week of heavy volume, and its momentum likely peaked Wednesday, he said, but munis still hold plenty of value.
"New money's surging into the asset class again. It's absorbing heavy supply. It's why deals are being bumped double digits, and secondary trading volume is surging," Pruskowski said. "We have August reinvestment demand still working in conjunction with new money that's creating positive momentum. It's just not going to go away anytime soon."
Fund flows
Investors added $1.308 billion into municipal bond mutual funds in the week ended Wednesday, following $761.1 million of inflows the prior week, according to LSEG Lipper data.
High-yield funds saw inflows of $530.3 million compared to outflows of $300 million the previous week.
New-issue market
In the primary market Thursday, Wells Fargo priced for the Lower Colorado River Authority (A1/A+/A+/) $445.86 million of transmission contract refunding and improvement revenue bonds, with 5s of 5/2028 at 2.74%, 5s of 2031 at 3.03%, 5s of 2036 at 3.48%, 5s of 2041 at 4.06%, 5s of 2046 at 4.37%, 5s of 2051 at 4.66% and 5s of 2056 at 4.78%, callable 5/2036.
J.P. Morgan priced for the San Francisco Public Utilities Commission (Aa2/AA//) $286.29 million of wastewater revenue refunding bonds, Series 2026B, with 5s of 10/2027 at 2.28%, 5s of 2031 at 2.63%, 5s of 2036 at 3.15% and 5s of 2040 at 3.61%, noncall.
In the competitive market, Oyster Bay, New York, sold $295.27 million of bond anticipation notes to Wells Fargo, with 4s of 8/2027 at 2.60%, noncall.
