Munis were weaker in spots Thursday as U.S. Treasuries were narrowly mixed and equities ended higher.
Muni yields were cut up to four basis points, depending on the scale. U.S. Treasury yields were changed up to two basis points.
Muni investors are experiencing "inflation indigestion," Hennion & Walsh's James Pruskowski said.
Different parts of the market are showing varied reactions to the week's conditions, Pruskowski said; parts of the "yield-oriented market" have stalled and certain sectors — like highway trust fund bonds and prepaid gas — have faced criticism. But other areas are faring well.
"As signaled by the lagging indicator of fund flows, I'm categorizing it as a cut-and-create environment, which means the deeper the market goes, in terms of higher yields, the more buyers that generates," Pruskowski said. "So, in a retail, long-only-centric-market at multi-decade high absolute rates, the market continues to trade really well."
Fund flows
Investors added $1.349 billion into municipal bond mutual funds in the week ended Wednesday, following $1.845 billion of inflows the prior week, according to LSEG Lipper data.
High-yield funds saw inflows of $218.3 million compared to inflows of $559.6 million the previous week.
New-issue market
In the primary market Thursday, J.P. Morgan priced for the Omaha Public Power District (Aa2/AA//) $642.205 million of electric system revenue bonds, Series 2026A, with 5s of 2/2030 at 2.76%, 5s of 2031 at 2.86%, 5s of 2036 at 3.19%, 5s of 2041 at 3.64%, 5s of 2046 at 4.10%, 5s of 2051 at 4.50% and 5s of 2056 at 4.67%, callable 2/2036.
Wells Fargo priced for the National Finance Authority $345.5 million of municipal certificates, Series 2026-2. The first tranche, $290.907 million of Class A-1 (/AA-//), saw 4.4s of 2/2043 with a tender date of 4/2036 at 4.42%, callable 4/2035.
The second tranche, $47.678 million of Class A-2 (/BBB//) saw 4.4s of 2/2043 with a tender date of 4/2036 at 4.78%, callable 4/2035.
The third tranche, $6.91 million of Class B subordinate bonds, saw 12.164s of 3/2044 with a tender date of 4/2036 at 10.50%.
