Municipal bonds extended their rally Thursday as U.S. Treasuries richened and equities ended up.
Muni yields were bumped up to 18 basis points, with the largest gains 10 years and in. UST yields fell two to 11 basis points.
The rally has been more of a technical driver. Absolute yields and ratios, at least on the muni side, are very attractive, with the asset class becoming "oversold," said Whitney Fitts, director of municipal portfolio management at Appleton Partners.
That is what's driving the muni rally even more than the UST rally, she said.
Given the attractive levels, now is a good time to buy munis, Fitts said.
"For those who've been waiting on the sidelines, or those who need to reallocate because the equity market's been running, this is a really nice spot to sell some of your equity exposure and get yourself realigned with a traditional 60/40 portfolio," she said.
Fund flows
Investors pulled $607.9 million from municipal bond mutual funds in the week ended Wednesday, following $633 million of inflows the prior week, according to LSEG Lipper data.
High-yield funds saw outflows of $379.9 million after outflows of $206.4 million the previous week.
Primary to come
In the primary market Thursday, J.P. Morgan priced for the Los Angeles Department of Water and Power (Aa3//AA-/AA/) $340 million of power system revenue bonds, 2026 Series C, 2026 Subseries C-1, with 5s of 7/2038 at 4.61%, 5s of 2041 at 5.02%, 5.5s of 2046 at 5.24%, 5.75s of 2053 at 5.37% and 5.25s of 2056 at 5.44%, callable 7/2036.
Loop Capital Markets priced for Riverside County $158.47 million of general fund teeter plan funding notes, 2026 Series A, with 3.95s of 10/2027 at 3.71%, noncall.
In the competitive market, Alexandria, Virginia, (Aaa/AAA//) sold $184.305 million of general obligation capital improvement bonds to J.P. Morgan, with 5s of 12/2027 at 3.33%, 5s of 2031 at 3.60%, 5s of 2036 at 4.00%, 5s of 2041 at 4.48%, and 5s of 2046 at 4.76%, callable 12/2036.
