NEW YORK — The municipal market closed an otherwise solid week with a whimper of light activity. But that’s because it was steeling itself for next week’s bang of anticipated new issuance.

“Next week’s calendar is unusually heavy,” a trader in Chicago said. “There’s no reason to chase the market on a Friday. A lot of people feel they can wait until next week. There’s a fair amount of money out there to be spent. So next week, we’ll see some robust activity.”

The primary next week is expecting the heaviest load of new bonds the market has seen this year. Muni new issuance is expected to total $8.27 billion versus a revised $5.71 billion this week. And traders noted that if the pricing is right, the market should have little difficulty in absorbing it, given the large amount of reinvestment money on the sidelines waiting to be put to work.

Munis ended the week slightly higher, according to the Municipal Market Data scale. High-grade yields maturing between 2022 and 2025, and between 2034 and 2037, inched up one basis point.

Maturities at the front of the curve and between 2026 and 2033 remained steady. Yields at the long end of the curve rose two basis points.

The benchmark 10-year muni yield closed flat at 2.66% for the fourth straight day, 32 basis points beneath its average for 2011. The two-year yield maintained a 0.40% yield for a fourth consecutive day, its low for 2011.

The 30-year yield climbed two basis points to 4.32%, 30 basis points under its average for the year.

Treasury yields ended this week firmer across the curve. The 10-year yield dropped five basis points to 2.91% on the day.

The two-year yield fell two basis points to 0.36%. And the 30-year yield slipped a basis point to 4.25%.

After new issuance, muni bond mutual funds, which this week saw their largest inflows of the year, provided another positive sign for the market. They had seen net outflows the previous week, as well as for most of 2011.

In the week ended July 13, there were net inflows of $367 million for muni bond funds that report their flows weekly, according to Lipper FMI. Investors the previous week pulled $272 million from muni funds.

RBC Capital Markets’ Chris Mauro, though, noted that he was encouraged that muni bond funds saw inflows this week but was disappointed that they were not more broad based.

“They were highly concentrated in just a few funds,” he wrote in a research brief.

High-yield muni funds also returned to the black after an off week; they saw inflows for only the eighth time in 10 weeks. Funds that report weekly saw inflows of $67 million, Lipper reported. The previous week, high-yield funds reported outflows of $27 million.

But the industry is not pleased with the standoff in Washington, where politicians are still butting heads over how to address the nation’s nearing its debt ceiling. Until the issue is resolved, the subsequent uncertainty and volatility will likely plague the bond markets.

The ratings agencies have tried to provide some impetus to move the process along. For its part, Standard & Poor’s wrote late Thursday that there is more than a 50% chance the U.S. rating will get downgraded in the coming 90 days.

Bond markets have been wrestling with the effects of this and economic numbers that have been released recently.

Along those lines, the Labor Department reported Friday that consumer prices fell 0.2% in June on a seasonally adjusted basis, after a revised 0.2% rise in May. Economists polled by Thomson Reuters had a median estimate of a 0.1% drop for prices.

In addition, the University of Michigan’s consumer sentiment survey plunged 7.7 points to 63.8, its lowest level in 16 months. That compared with the final June 71.5, the preliminary June 71.8, and the final May 74.3 reading, according to market sources.

Thomson Reuters’ economists polled had predicted a 72.5 reading for the index.

Finally, the European Banking Authority reported that just eight of 90 European banks failed their respective stress tests. The results exceeded markets expectations.

The municipal market closed an otherwise solid week with a whimper of light activity. But that’s because it was steeling itself for this week’s bang of anticipated new issuance.

“Next week’s calendar is unusually heavy,” a trader in Chicago said. “There’s no reason to chase the market on a Friday. A lot of people feel they can wait until next week. There’s a fair amount of money out there to be spent. So next week we’ll see some robust activity.”

The primary this week is expecting the heaviest load of new bonds the market has seen this year. Muni new issues are expected to total $8.27 billion, versus a revised $5.71 billion last week. Traders noted that if the pricing is right, the market should have little difficulty in absorbing it, given the large amount of reinvestment money on the sidelines waiting to be put to work.

Munis ended last week slightly higher, according to the Municipal Market Data scale. High-grade yields maturing between 2022 and 2025, and between 2034 and 2037, inched up one basis point.

Maturities at the front of the curve and between 2026 and 2033 remained steady. Yields at the long end of the curve rose two basis points.

The benchmark 10-year muni yield closed flat at 2.66% for the fourth straight day, 32 basis points beneath its average for 2011. The two-year yield maintained a 0.40% yield for a fourth consecutive day, its low for 2011.

The 30-year yield climbed two basis points to 4.32%, 30 basis points under its average for the year.

Treasury yields ended last week firmer across the curve. The 10-year yield dropped five basis points to 2.91% on the day.

The two-year yield fell two basis points to 0.36%. The 30-year yield slipped a basis point to 4.25%.

After new issuance, muni bond mutual funds, which last week saw their largest inflows of the year, provided another positive sign for the market. They had seen net outflows the previous week, as well as for most of 2011.

In the week ended July 13, there were net inflows of $367 million for muni bond funds that report their flows weekly, according to Lipper FMI. Investors the previous week pulled $272 million from muni funds.

Chris Mauro of RBC Capital Markets, though, said he was encouraged that muni bond funds saw inflows last week but was disappointed that they were not more broad-based.

“They were highly concentrated in just a few funds,” he wrote in a research brief.

High-yield muni funds also returned to the black after an off week; they saw inflows for only the eighth time in 10 weeks. Funds that report weekly saw inflows of $67 million, Lipper reported. The previous week, high-yield funds reported outflows of $27 million.

But the industry is not pleased with the standoff in Washington, where politicians are still butting heads over how to address the nation’s debt-ceiling crisis. Until the issue is resolved, the subsequent uncertainty and volatility will likely plague the bond markets.

The rating agencies have tried to provide some impetus to move the process along. For its part, Standard & Poor’s wrote late Thursday that there is more than a 50% chance the United States’ rating will get downgraded in the next 90 days.

Bond markets have been wrestling with the effects of this and economic numbers that have been released recently.

Along those lines, the Labor Department reported Friday that consumer prices fell 0.2% in June on a seasonally adjusted basis, after a revised 0.2% rise in May. Economists polled by Thomson Reuters had a median estimate of a 0.1% drop for prices.

In addition, the University of Michigan’s consumer sentiment survey plunged 7.7 points to 63.8, its lowest level in 16 months, following the final June reading of 71.5.

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