Price stability was outweighing trading activity and volume on Thursday morning in the municipal market, according to John Mousseau, chief executive officer at Cumberland Advisors.
“I would characterize the market as slow in trading, low in supply, and solid in price,” he said Thursday just before noon. “I certainly would expect supply to pick up as we get towards the end of the summer,” he added, noting that long yield ratios are expected to grind lower.
Municipal bonds were mixed on Thursday, according to a midday read of the MBIS benchmark scale. Benchmark muni yields fell less than one basis point in the seven- to 13-year and 18- to 30-year maturities, rose less than a basis point in the one- to six-year and 14- to 16-year maturities and remained unchanged in the 17-year maturity.
High-grade munis were mixed, with yields calculated on MBIS’ AAA scale falling less than one basis point in the eight- to 12-year and 15- to 27-year maturities, rising less than a basis point in the one- to seven-year, 14-year, and 29- and 30-year maturities and remaining unchanged in the 13-year and 28-year maturities.
Municipals were weaker on Municipal Market Data’s AAA benchmark scale, which showed the 10-year muni general obligation yield rising by as much as one basis point and the yield on the 30-year muni maturity gaining as much as two basis points.
Treasury bonds were stronger as stocks traded mixed.
On Wednesday, the 10-year muni-to-Treasury ratio was calculated at 82.9% while the 30-year muni-to-Treasury ratio stood at 97.4%, according to MMD. The muni-to-Treasury ratio compares the yield of tax-exempt municipal bonds with the yield of taxable U.S. Treasury with comparable maturities. If the muni/Treasury ratio is above 100%, munis are yielding more than Treasury; if it is below 100%, munis are yielding less.
ICI: Long-term muni funds see $1.765B inflow
Long-term tax-exempt municipal bond funds saw an inflow of $1.765 billion in the week ended July 18, the Investment Company Institute reported.
This followed an inflow of $1.028 billion into the tax-exempt mutual funds in the week ended July 11 and inflows of $356 million, $525 million, $742 million, $326 million, $648 million, $661 million, $185 million and $450 million in the eight prior weeks.
Taxable bond funds saw an estimated inflow of $6.894 billion in the latest reporting week, after seeing an inflow of $6.416 billion in the previous week.
ICI said the total estimated inflows to long-term mutual funds and exchange-traded funds were $8.013 billion for the week ended July 18 after inflows of $3.343 billion in the prior week.
Tax-exempt money market funds saw outflows
Tax-exempt money market funds saw outflows of $2.97 billion, lowering total net assets to $134.58 billion in the week ended July 23, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $1.74 billion to $137.55 billion in the prior week.
The average, seven-day simple yield for the 201 weekly reporting tax-exempt funds fell to 0.54% from 0.60% the previous week.
The total net assets of the 832 weekly reporting taxable money funds rose $9.23 billion to $2.675 trillion in the week ended July 24, after an outflow of $7.51 billion to $2.666 trillion the week before.
The average, seven-day simple yield for the taxable money funds rose to 1.55% from 1.54% from the prior week.
Overall, the combined total net assets of the 1,033 weekly reporting money funds rose $6.26 billion to $2.810 trillion in the week ended July 24, after outflows of $8.52 billion to $2.803 trillion in the prior week.
Previous session's activity
The Municipal Securities Rulemaking Board reported 39,920 trades on Wednesday on volume of $13.93 billion.
California, New York and Texas were the states with the most trades, with the Golden State taking 16.437% of the market, Empire State taking 11.762% and Lone Star State taking 9.205%.
RBC Capital Markets received the official award on the Patriots Energy Group Financing Agency’s $832.35 million of Series 2018 gas supply revenue bonds. The deal is expected to be rated Aa2 by Moody’s Investors Service and is rated AA by Fitch Ratings.
Citigroup received the written award on the University of Colorado Hospital Authority’s $197.35 million of Series 2018A, B and C refunding revenue bonds. The deal is rated Aa3 by Moody’s, AA-minus by S&P and AA by Fitch.
Thursday’s bond deals
Click here for the Patriots Energy deal
Bond Buyer 30-day visible supply at $5.35B
The Bond Buyer's 30-day visible supply calendar decreased $2.73 billion to $5.35 billion for Thursday. The total is comprised of $2.64 billion of competitive sales and $2.71 billion of negotiated deals.
Treasury to sell discount bills
The Treasury Department said Thursday it will auction $51 billion 91-day bills and $45 billion 182-day discount bills Monday.
The 91s settle Aug. 2, and are due Nov. 1, and the 181s settle Aug. 2, and are due Jan. 31, 2019. Currently, there are $41.996 billion 91-days outstanding and $19.995 billion 182s.
Gary Siegel contributed to this report.
Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation. Click here for a brief tour of the Workstation, or contact Ziad Saba at 212-803-6079 for more information.