Top-quality municipal bonds finished weaker on Monday, according to traders, as the market prepared for more than $9 billion of new supply this week.

The yield on the 10-year benchmark muni general obligation on Monday rose three basis points to 2.40% from 2.37% on Friday, while the yield on the 30-year increased three basis points to 3.13% from 3.10%, according to the final read of Municipal Market Data's triple-A scale.

Meanwhile, U.S. Treasuries were stronger on Monday. The yield on the two-year dipped to 1.11% from 1.12% on Friday, the 10-year Treasury dropped to 2.32% from 2.35%, while the yield on the 30-year Treasury bond decreased to 2.98% from 3.00%.

"Customer selling pressure has caused munis to diverge from Treasuries," MMD Senior Market Analyst Randy Smolik wrote in a Monday market comment, who added that munis took a hit after substantial bond fund outflows. "Treasuries continued to trade well on month-end buying extension and concerns over this weekend's Italian political referendum," he wrote.

The 10-year muni to Treasury ratio was calculated at 103.5% on Monday compared with 100.7% on Friday while the 30-year muni to Treasury ratio stood at 104.9% versus 102.6%, according to MMD.

Prior Week's Actively Traded Issues

Revenue bonds comprised 59.78% of new issuance in the week ended Nov. 25, up from 59.44% in the previous week, according to Markit. General obligation bonds comprised 35.61% of total issuance, up from 35.51%, while taxable bonds made up 4.61%, down from 5.05%.

Primary Market

Market participants were back at work after the long Thanksgiving weekend and keeping an eye on rising muni yields.

Volume for the week is estimated at $9.1 billion, comprised of $6.72 billion of negotiated deals and $2.38 billion of competitive sales.

While there were no large deals pricing Monday, action will heat up on Tuesday with a variety of new offerings.

Raymond James is scheduled to price the New York City Municipal Water Authority's $400 million of water and sewer system second general resolution revenue bonds on Tuesday.

The deal is rated Aa1 by Moody's Investors Service and AA-plus by S&P Global Ratings and Fitch Ratings.

Wells Fargo is expected to price the Board of Regents of the University of Texas' $300 million of system revenue financing system bonds on Tuesday.

The deal is rated triple-A by Moody's, S&P and Fitch.

In the competitive arena on Tuesday, the city and county of San Francisco's Public Utility Commission will be selling $256.49 million of Series 2016C taxable water revenue green bonds.

The deal is rated Aa3 by Moody's and AA-minus by S&P.

Also on Tuesday, Orange County, Fla., is competitively selling two separate issues totaling $296.57 million.

The offerings consist of $206.74 million of Series 2016B tourist development tax refunding revenue bonds and $89.83 million of Series 2016A tourist development tax refunding revenue bonds.

Both sales are rated Aa3 by Moody's, AA-minus by S&P and AA by Fitch.

Lipper: Muni Bond Funds See Outflows

Municipal bond funds again reported outflows as investors pulled cash out of the market, according to Lipper data released late Thursday.

The weekly reporters saw $2.232 billion of outflows in the week ended Nov. 23, after outflows of $3.012 billion in the previous week.

The four-week moving average declined to negative $1.376 billion after being in the red at negative $734.368 million in the previous week. A moving average is an analytical tool used to smooth out price changes by filtering out fluctuations.

Long-term muni bond funds experienced outflows, losing $1.467 billion in the latest week after outflows of $2.585 billion in the previous week. Intermediate-term funds had outflows of $500.210 million after outflows of $332.967 million in the prior week.

National funds had outflows of $1.849 billion after outflows of $2.685 billion in the previous week. High-yield muni funds reported outflows of $929.623 million in the latest reporting week, after outflows of $1.585 billion the previous week.

Exchange traded funds saw outflows of $77.721 million, after outflows of $212.832 million in the previous week.

Tax-Exempt Money Market Fund Inflows

Tax-exempt money market funds experienced inflows of $447.0 million, bringing total net assets to $130.04 billion in the week ended Nov. 21, according to The Money Fund Report, a service of iMoneyNet.com. This followed an inflow of $303.1 million to $129.59 billion in the previous week.

The average, seven-day simple yield for the 237 weekly reporting tax-exempt funds rose to 0.16% from 0.15% in the previous week.

The total net assets of the 867 weekly reporting taxable money funds increased $23.02 billion to $2.547 trillion in the week ended Nov. 22, after an inflow of $6.51 billion to $2.524 trillion the week before.

The average, seven-day simple yield for the taxable money funds was unchanged from 0.15% in the previous week.

Overall, the combined total net assets of the 1,104 weekly reporting money funds rose $23.46 billion to $2.677 trillion in the week ended Nov. 22 after inflows of $6.81 billion to $2.654 trillion in the prior week.

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