Munis strengthened further Wednesday, though the asset class saw smaller gains than Tuesday's rally. U.S. Treasuries ended little changed and equities closed higher.
Muni yields were bumped two to four basis points, depending on the scale. UST yields fell by up to one basis point.
The muni market's gains are likely a continuation of Tuesday's rally, where muni yields fell four to nine basis points, depending on the scale, said Cooper Howard, director of fixed income research and strategy at the Schwab Center for Financial Research. He also pointed to the demand created by recent positive fund flows. The market's performance for the rest of the week may be determined by personal consumption expenditures data set to be released on Thursday, Howard said.
"Is there going to be a carry-through of higher inflation expectations? And right now, expectations are that PCE should rise about 3.8% year-over-year," Howard said. "If we see a little bit higher than that number, I wouldn't be surprised if we start to see Treasuries sell off and yields rise, and munis follow suit."
ICI data
The Investment Company Institute Wednesday reported inflows of $1.941 billion for the week ending May 20, following $1.9 billion of inflows the previous week. Inflows have topped $1 billion each of the past five weeks.
Exchange-traded funds saw inflows of $1.433 billion after $1.057 billion of inflows the week prior, per ICI data.
New-issue market
In the primary market Wednesday, Ramirez priced for the New York City Transitional Finance Authority (Aa1/AAA/AAA/) $2.115 billion of future tax secured subordinate bonds. The first tranche, $1.1 billion of tax-exempt Fiscal 2026 Series G, Subseries G-1 bonds, saw 5s of 11/2028 at 2.71%, 5s of 2031 at 3.00%, 5s of 2036 at 3.41% and 5s of 2039 at 3.70%, callable 11/2036.
The second tranche, $75.04 million of taxable Fiscal 2026 Series G, Subseries G-2 bonds, saw 4.33s of 11/2027 priced at par, subject to a make-whole call at any time at T+7.5 basis points.
The third tranche, $39.645 million of tax-exempt Fiscal 2026 Series H bonds, saw 5s of 11/2026 at 2.57%, 5s of 2031 at 3.00%, 5s of 2036 at 3.41% and 5s of 2039 at 3.70%, callable 11/2036.
The fourth tranche, $900 million of tax-exempt Fiscal 2006 Series I bonds, saw 5s of 11/2027 at 2.64%, 5s of 2031 at 3%, 5s of 2036 at 3.41%, 5s of 2041 at 3.79%, 5s of 2046 at 4.25%, 5.25s of 2051 at 4.55% and 5.25s of 2054 at 4.60%, callable 11/2036.
In the competitive market, King County, Washington, (Aa1/AA+//) sold to BofA Securities $269.595 million of sewer revenue and refunding bonds, Series 2026A, with 5s of 7/2027 at 2.54%, 5s of 2031 at 2.77%, 5s of 2036 at 3.18%, 5s of 2041 at 3.55%, 5s of 2046 at 4.11%, 5s of 2051 at 4.43% and 5s of 2056 at 4.48%, callable 7/2036.
Prince George's County, Maryland, (Aa1/AAA/AAA/) sold to BofA Securities $248.7 million of GO consolidated public improvement bonds, Series 2026A, with 5s of 8/2027 at 2.54%, 5s of 2031 at 2.76%, 5s of 2036 at 3.14%, 5s of 2041 at 3.52% and 5s of 2046 at 4.06%, callable 8/1/2036.
