Economic indicators

Strong technicals have been the theme, and with federal aid and better-than-expected tax receipts coming in, issuers are not tapping the market as much as investors would hope.

The new-issue market came alive with two high-grade competitive loans and the speculative-grade Pacific territory pricing bonds to strong demand.

Price indexes in the latest New York manufacturing survey came in higher than expected, furthering inflation concerns.

After facing outside economic data pressures and rising U.S. Treasuries, municipals ended the week on solid footing ahead of a larger calendar with newly upgraded Connecticut leading with $1 billion of exempt and taxable GOs.

Refinitiv Lipper reported $750 million of inflows into municipal bond mutual funds for the week ending May 12 while high-yield funds saw $487 million of inflows.

While the pressure was on municipal yields, which rose two to four basis points, the Investment Company Institute reported another week of inflows, with $928 million coming into municipal bond mutual funds and another $285 million into ETFs.

First quarter FDIC data show a $10.75 billion-plus jump in U.S. banks’ net purchases of municipal securities, the eighth biggest quarter since 2003, MMA says.

Tighter spreads and richer ratios are likely to continue, particularly as looming tax increases amplify the value of the tax-exemption, but analysts are hesitant to predict how much lower rates can go before investors balk.

A disappointing jobs report gives credence to the Federal Reserve’s concern about slack in the labor market.

Refinitiv Lipper reported $584 million of inflows, $341 million of which went to high-yield, as investors pull back on reinvesting to pay tax bills with the May 17 tax filing deadline looming.