As issuers prepare to bring more than $4 billion in long-term supply to the primary market this week, negative headlines regarding ongoing mutual fund outflows, as well as the impact of a weakening market for Puerto Rico’s debt and potential fallout from the debt-ceiling debate, continued to weigh on the municipal market.

Michael Pietronico, chief investment officer at Miller Tabak Asset Management said the lack of supply is helping to stem some, though not all, of the price volatility. “Puerto Rico has blown Detroit away as the number one problem for the municipal market,” he said on Friday. “It remains challenging to find consistant demand outside of 10 years on the municipal yield curve, so sluggish supply should keep the trend in weaker prices from picking up pace.”

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