Inflation

On the buy-side, weakness, outflows, supply issues, and poor liquidity are making life challenging for municipal bond investors. The same could be said for issuers.

Investors pulled more from municipal bond mutual funds in the latest week, with Refinitiv Lipper reporting $2.446 billion of outflows, though that was down from $2.669 billion of outflows in the previous week.

Valuations look increasingly attractive relative to other fixed income asset classes, even as rising interest rates continue to weigh on the market, strategists say.

Outflows continue with the Investment Company Institute reporting $6.167 billion pulled from muni bond mutual funds in the week ending May 4, up from $5.371 billion of outflows in the previous week. 

Inflation is "absolutely a problem," Yellen told a Senate panel, adding that the hot labor market illustrates the success of aid packages like the American Rescue Plan.

Investors pulled more from municipal bond mutual funds in the latest week, with Refinitiv Lipper reporting $2.669 billion of outflows, though down from $2.875 billion of outflows in the previous week.

Relative cheapness, wider spreads and underperformance in munis are providing better value, all set against a very solid and resilient credit background, analysts say, but supply is testing investor sentiment amid volatility.

“I would say that 50 basis points will be on the table for the May meeting,” Federal Reserve Chair Jerome Powell said Thursday.

State and local governments are flush with cash and well-positioned to embrace the coming storm, experts say.

The significant cheapening of municipals in recent weeks continues to create headwinds for the overall tax-exempt market on a daily basis.

Investors pulled more from municipal bond mutual funds last week, with Refinitiv Lipper reporting $4.106 billion of outflows, bring the total to $22.3 billion of outflows year-to-date.

Like last week, supply for the new-calendar issuance is light at $4.804 billion with $3.182 billion of negotiated deals and $1.622 billion of competitive loans.

The second quarter should bring more opportunity and less volatility following the worst quarter in four decades, analysts said.

Investors pulled more from municipal bond mutual funds as the Investment Company Institute on Wednesday reported $4.786 billion of outflows, up from $4.459 billion of outflows in the previous week.

The March consumer price index offered little to deter the Federal Reserve from its aggressive plans, but markets saw it as a positive, having feared an upside miss.

Next week's supply is slated to be $10.166 billion, $8.982 billion of negotiated deals and $1.184 billion of competitive loans. A larger primary calendar is led by two billion-dollar airport deals.

Investors pulled more from municipal bond mutual funds in the latest week, with Refinitiv Lipper reporting $2.038 billion of outflows, up from $1.503 billion of outflows in the previous week.

The Investment Company Institute on Wednesday reported $2.728 billion of outflows in the week ending March 23, down from $3.615 billion of outflows in the previous week.

California Gov. Gavin Newsom and his party's leaders have proposed conflicting plans to give residents relief from gas taxes.

The triple-A 10-year yield is above 2% on all scales, the highest since March 2020.