Buy side

The primary market should be fairly brisk this week as the new-issue calendar includes two California deals each larger than $1 billion, a handful of Build America Bond issues, short-term notes, variable-rate bonds, and a generous helping of long-term essential service issues.

It appears the wave of cash flooding the industry all year may have finally crested.

The Bond Buyer’s weekly yield indexes were mixed this week, as municipals were little changed following last week’s sell-off, which prompted a number of issuers to pull scheduled refunding deals from this week’s primary.

The assets of tax-exempt money market funds declined by $2.70 billion and settled at $417.89 billion for the week ending Oct. 19, according to the Money Fund Report, a service of iMoneyNet.com.

A little more than a year ago, precisely at the time people were scrambling to protect the value of their municipal bonds, hedging to protect the value of munis became untenable.

Three professors from Willamette University have published a study reaching a surprising conclusion — municipalities do not sell more bonds when federal tax rates go up.

As exchange-traded funds continue to grow in scope and popularity, investment experts warn that some products, such as leveraged and inverse ETFs, may be too dangerous for all but the most experienced investors.

The sell-off in municipals last week finally stemmed the tide of cash that had flooded municipal bond mutual funds for the better part of a year.

Issuers plan to price an estimated $11.69 billion of new deals this week, according to Ipreo LLC and The Bond Buyer. Participants are hoping the market continues to recover some of the ground it gave up last week when weakness put a damper on primary activity as yields rose by at least 10 basis points in the intermediate slope of the curve and forced postponement of at least two large deals.

All The Bond Buyer’s weekly yield indexes for long-term debt climbed this week, as muni yields continued to push higher, even increasing by as much as 10 basis points in spots Wednesday, prior to finally stabilizing yesterday.

Outflows totaling $3.06 billion caused tax-exempt money market funds to dip to $420.59 billion in total assets during the week ending Oct. 12, according to the Money Fund Report, a service of iMoneyNet.com.

Municipal bond sales are expected to be slightly lower during this holiday-shortened Columbus Day week, with an estimated $8.32 billion of new volume hitting the market, according to Ipreo LLC and The Bond Buyer. Last week, $8.42 billion of bonds came to market, according to Thomson Reuters.

Weekly reporting municipal bond mutual funds had a net inflow of $1.702 billion during the week ending Oct. 7, Lipper FMI reported.

Life has gotten easier for municipal bond exchange-traded funds.

Tax-exempt money market funds generated inflows of $643.2 million and finished the week of Oct. 5 with $423.649 billion in total assets, according to the Money Fund Report, a service of iMoneyNet.com.

Most of The Bond Buyer’s weekly yield indexes rose this week, as several weeks of permeating market firmness began to reverse and some weakness appeared.

Banks ramped up purchases of municipal bonds in the first half of the year in the wake of federal legislation designed to stimulate banks’ interest in state and local government debt.

Municipal closed-end funds notched another stellar month in September as investors continued to flock to the sector’s fat tax-exempt yields.

The tide of money washing over municipal bond mutual funds eased up a touch last week.

The California municipal market is gearing up for a week of brisk activity as the state plans to sell $4.5 billion of general obligation debt — including Build America Bonds — while two other issuers ready sizable offerings.