Munis were little changed Thursday as U.S. Treasuries saw gains and equities ended up.
Muni yields were cut up to two basis points, depending on the curve, while UST yields fell two to six basis points, with the largest gains on the front end.
Right now, rates can't get any traction due to "Iran re-escalating, hawkish Fed[eral Open Market Committee meeting] minutes, Treasury auctions [and] AI bond supply crowding credit," among other factors, said James Pruskowski, managing director at Hennion & Walsh.
"The market has never been great at focusing on more than one thing at a time, and right now it's being asked to focus on everything simultaneously," he said.
As a result, munis have stalled somewhat, but market participants may be focusing on the wrong thing, Pruskowski said.
"Absolute yields are historically attractive, and long-only flows are surging; that combination is exactly why record supply is having far less impact than everyone feared," he said.
However, people are "obsessed" with rich ratios, but that's the "wrong conversation," Pruskowski said.
"Sitting on the sidelines waiting for ratios to cheapen while income piles up; you're leaving real money on the table," he said.
Fund flows
Investors added $1.378 billion into municipal bond mutual funds in the week ended Wednesday, following $1.691 billion of inflows the prior week, according to LSEG Lipper data.
High-yield funds saw inflows of $108.9 million compared to inflows of $555.7 million the previous week.
Tax-exempt municipal money market funds saw inflows of $2.565 billion for the week ending July 6, bringing total assets to $151.44 billion, according to the Money Fund Report, a weekly publication of EPFR.
The average seven-day simple yield for all tax-free and municipal money-market funds was 1.54%.
Taxable money-fund assets saw $61.642 billion added, bringing the total to $7.79 trillion.
The average seven-day simple yield was 3.35%.
The SIFMA Swap Index was at 1.82% on Wednesday compared to the previous week's 1.64%.
New-issue market
In the primary market Thursday, Barclays priced for the Trustees of California State University (Aa2/AA-//) $1.806 billion of systemwide revenue bonds. The first tranche, $1.556 billion of Series 2026A, saw 5s of 11/2026 at 2.24%, 5s of 2031 at 2.62%, 5s of 2036 at 3.09%, 5s of 2041 at 3.48% (callable), 5s of 2041 at 3.53% (noncall), 5s of 2046 at 3.87%, 5s of 2051 at 4.20% and 5s of 2057 at 4.36%.
The second tranche, $50.045 million of Series 2026B-1, saw 2.9s of 11/2047 with a tender date of 11/2029 price at par, callable 5/2029.
The third tranche, $100.085 million of Series 2026B-2, saw 2.9s of 11/2049 with a tender date of 11/2029 price at par, callable 5/2029.
The fourth tranche, $100.085 million of Series 2026B-3, saw 3.15s of 11/2051 with a tender date of 11/2032 price at par, callable 5/2032.
BofA Securities priced for the Massachusetts Port Authority (Aa2/AA/AA/) $785.015 million of revenue bonds. The first tranche, $493.615 million of non-AMT Series 2026-A bonds, saw 5s of 7/2027 at 2.34%, 5s of 2031 at 2.70%, 5s of 2036 at 3.17%, 5s of 2041 at 3.57%, 5s of 2046 at 4.00%, 5.25s of 2051 at 4.28% and 5.25s of 2056 at 4.46%, callable 7/2036.
The second tranche, $291.4 million of AMT Series 2026-B bonds, saw 5s of 7/2031 at 3.08%, 5s of 2036 at 3.54%, 5.25s of 2041 at 3.91%, 5.25s of 2046 at 4.34%, 5.5s of 2051 at 4.48% and 5.5s of 2056 at 4.60%, callable 7/2036.
In the competitive market, Clark County, Nevada, (Aa1/AAA//) sold $165.71 million of GO bond bank refunding bonds to J.P. Morgan, with 5s of 11/2027 at 2.37%, 5s of 2031 at 2.77% and 5s of 2034 at 3.05%, noncall.
