Economic indicators

The increase in yields and spread widening across municipal sectors has given some pause to high-yield investors after months of stagnation.

Municipals took a breather Monday, largely ignoring stock market volatility and softer U.S. Treasuries, ahead of a solid $9 billion new-issue week.

Ratios have moved into a higher, more favorable range, especially in the belly of the curve. The municipal calendar is building, led by taxables and refundings, after they dropped significantly in September.

The lower inflows and high-yield outflows can be tied to the correction over the past week and may point to uncertainty from retail investors over broader market volatility.

With a lot of cash still needing to be put to work, the Investment Company Institute showed another large week of inflows at $1.814 billion.

The high-grade muni scales saw cuts of up to four basis points in a continued selloff Monday as the market faces a robust slate of new issues.

Month-to-date returns for municipals are in the red with the Bloomberg Fixed Income Indices municipal index returning -0.12%, high-yield at -0.15% and taxables at -0.32%.

Data released Tuesday reflected a murky picture on the strength of the economy, but the market’s eyes were fixed on the Federal Reserve’s policy meeting in Washington, D.C.

Municipals have been distracted by the robust primary market and that trend will continue next week when another large new-issue calendar greets investors.

Refinitiv Lipper reported $1.3 billion of inflows and an increase in high-yield flows, marking the 28th consecutive week the fund complex saw inflows.