Munis and U.S. Treasuries saw small losses on Thursday as markets await Federal Reserve Chair Kevin Warsh's Jackson Hole speech. Equities ended higher.
Muni yields cheapened by up to two basis points, depending on the scale. UST yields were weaker by one to three basis points.
The Jackson Hole symposium began on Thursday, but investors are most interested in Warsh's keynote address on Friday, said Cooper Howard, director of fixed income strategy at Charles Schwab. Warsh has been vocally opposed to sharing much forward guidance, Howard noted, so his speech may be fairly short and light on details that could sway markets.
"I think that he's going to lean more toward potential changes toward what's happening with the Fed and less so about the outlook for policy going forward," Howard said. Since inflation reports haven't shown progress in reducing inflation to the Fed's 2% target, Howard added, Warsh may reiterate that it's part of the Fed's mandate to bring inflation down.
Fund flows
Investors added $1.442 billion into municipal bond mutual funds in the week ended Wednesday, following $838.3 million of inflows the prior week, according to LSEG Lipper data.
High-yield funds saw inflows of $302.7 million compared to inflows of $208.3 million the previous week.
New-issue market
In the primary market Thursday, Wells Fargo priced for California (Aa2/AA-/AA-/) an upsized $3.145 billion of various purpose general obligation bonds. The first tranche, $600 million, saw 5s of 8/2027 at 2.49%, 5s of 2043 at 4.07%, 5s of 2046 at 4.25%, 5s of 2050 at 4.43% and 5s of 2056 at 4.55%, callable 8/2036.
The second tranche, $2.545 billion of refunding GOs, saw 5s of 8/2027 at 2.49%, 5s of 2031 at 2.92%, 5s of 2036 at 3.40%, 5s of 2038 at 3.64%, 5s of 2046 at 4.25% and 4.25s of 2046 at 4.39%, callable 8/2036.
In the competitive market, the South Carolina Association of Governmental Organizations (MIG 1///) sold $310.92 million of certifications of participation, Series 2026B, to Wells Fargo, with 5s of 3/2027 at 2.70%, noncall.
