The value of bonds in the municipal market is still largely a function of lack of supply, even as developments in Puerto Rico and the Fed's tapering policy contribute to market dynamics.
There are no negotiated bond issues $100 million or larger scheduled for the remainder of the week, according to data from Thomson Reuters and Ipreo. There is just one competitive issue, $140.2 million of Oyster Bay, New York, bonds slated for Thursday morning.
"Supply demand balance is favorable given light new issue volume and modest inflows to muni funds," Janney Capital Markets said in its morning report Thursday.
Municipal mutual funds tracked by ICI registered $162 million of net new assets in the week ending February 12, according to Janney.
"Five consecutive weeks of inflow are encouraging, but the $235 million weekly pace is modest compared to an average $2 billion weekly outflow in the June through December period of 2013," Janney's Alan Schankel wrote.
New issuance this week is expected to total just $2.28 billion, led by $400 million Morgan Stanley-led Metropolitan Transportation Authority deal and $201 million of Citi-led Louisiana highway bonds.
Both of those deals priced for retail Wednesday with institutional pricing expected Thursday.
Treasury yields were higher Thursday morning, led by the two-year yield, which climbed three basis points to 0.34%. The benchmark 30-year Treasury was up one basis point to 3.71%, while the 10-year climbed the same amount to 2.74%.
