Economic indicators

Municipals returned 0.83% in July with a year-to-date return of 1.90%. High-yield returned 1.20% in July and 7.40% year-to-date. Taxables led July with 1.65% returns and 1.95% for the year.

Muni participants await a new month with growing issuance, but perhaps not quite enough as issuers are hesitant to add more debt before final word from Washington on infrastructure.

Washington GOs came at tighter spreads than a spring sale in the competitive market while sizable negotiated deals saw bumps in repricings. Refinitiv Lipper reported $1.4 billion of inflows in the 21st consecutive week.

The pandemic was strikingly different than Sept. 11, financial meltdowns and other disasters, according to Robert Mujica.

Low ratios, low yields and massive demand are leading to a market that is mostly on its own. Refinitiv Lipper reported $1.7 billion of inflows.

Municipal triple-A benchmarks were pushed to lower yields by one to three basis points across the curve, with the bigger moves out long, but still vastly underperformed the 10-plus basis point moves in UST.

Supply, however, is still less than the massive amounts of cash on hand. Bond Buyer data shows 30-day visible supply at $12.53 billion.

Fund inflows are a demand component unlikely to slow during the heavy reinvestment season, keeping the yield environment squarely in issuers' favor.

U.S. Treasury 10- and 30-year yields hit February lows. Large blocks of high-grades in secondary trading led triple-A benchmarks to lower yields by two to four basis points across the curve.

With better-than-expected payrolls, economists still caution full recovery is a ways away. Muni participants are closely following how the Fed's action — or inaction — will affect the municipal market going forward.