Munis were slightly weaker on Wednesday following Tuesday's selloff, as U.S. Treasuries saw modest gains and equities ended higher.
Muni yields cheapened by up to two basis points, depending on the scale. UST yields fell by two to three basis points.
The muni market is still struggling with the same forces that created Tuesday's selloff, said Tim Iltz, fixed income credit and market analyst at HJ Sims, and the $5.6 billion daily calendar isn't helping. The UST market has seen some relief, but globally, fixed-income markets are still rising a bit, Iltz said.
Muni investors are being treated to a "buffet" in the new-issue market, Iltz said. Declining activity in the secondary market is likely to push yields higher. It's likely, Iltz said, that accounts will eventually "atrophy" in terms of "what they're willing to accept and certainly in terms of the calendar."
"This is kind of the position that [muni investors] want to be in," Iltz said. "The concern for these accounts, though, is largely what do returns look like going forward? If we have a market that's weakening a little bit because of all of this issuance, certainly that has an effect on their performance."
ICI data
The Investment Company Institute Wednesday reported inflows of $754 million for the week ending Aug. 26, following $1.39 billion of inflows the previous week.
Exchange-traded funds saw inflows of $1.73 billion after $974 million of inflows the week prior, per ICI data.
New-issue market
In the primary market Wednesday, J.P. Morgan priced for Chicago (/A+/A+/A+/) $1.3 billion of O'Hare International Airport AMT general senior lien revenue and refunding bonds, Series 2026B, with 5s of 1/2027 at 3.03%, 5s of 2031 at 3.56%, 5s of 2036 at 4.14%, 5.25s of 2041 at 4.71%, 5.5s of 2046 at 4.98%, 5.5s of 2051 at 5.19%, 5s of 2056 at 5.26% (Assured Guaranty-insured) and 5.75s of 2061 at 5.26%, callable 7/2036.
BofA priced for the Salt River Project Agricultural Improvement and Power District, Arizona, (Aa1/AA+//) $1.26 billion of electric system revenue bonds. The first tranche, $1.11 billion of Series 2026A bonds, saw 5s of 1/2028 at 2.69%, 5s of 2031 at 3.02%, 5s of 2036 at 3.56%, 5.25s of 2042 at 4.24%, 5.25s of 2046 at 4.46%, 5.25s of 2051 at 4.75%, 5s of 2057 at 4.92% and 5.5s of 2057 at 4.79%, callable 1/2037.
The second tranche, $150 million of Series 2026B green bonds, saw 5.25s of 1/2039 at 3.96% and 5.25s of 2041 at 4.21%, callable 1/2037.
In the competitive market, Maryland (/AAA/AAA/AAA/) sold $322.31 million of general obligation bonds to BofA, with 5s of 9/2029 at 2.79%, 5s of 2031 at 3.00% and 5s of 2036 at 3.58%, noncall.
The state also sold $277.69 million of GOs to BofA, with 5s of 9/2037 at 3.71% and 5s of 2041 at 4.14%, callable 9/2036.
