Primary bond market

By the close, muni yields were bumped up to four basis points, depending on the curve, while UST yields rose two to five basis points.

As the "slope of the municipal yield curve remains extremely steep and long bonds are cheap relative to U.S. Treasuries," Daryl Clements, a portfolio manager at AllianceBernstein, predicts "long municipal bonds have a long way to go until they are considered fair value."

Minnesota plans to go to market Sept. 23 with a $1.27 billion general obligation bond sale.

"This was a much-needed rally as the long end struggled throughout the year, but now has been pushed back into positive territory," said Jason Wong, vice president of municipals at AmeriVet Securities.

The authority's borrowing apparatus is maintaining a business-as-usual approach it embarks on a massive new capital program and fends off federal cuts.

Tax-exempt munis, supported by USTs, are having a very good month as MMD yields are down 30 to 35 basis points out long, and both the investment-grade and high-yield indices are seeing gains of more than 2% month-to-date, Barclays strategists led by Mikhail Foux said.

Investors added $2.183 billion to municipal bond mutual funds in the week ended Wednesday, following $623.3 million of inflows the prior week, according to LSEG Lipper data.

The commission also approved an audit for the financially troubled Winston-Salem/Forsyth County School District.

October is looking to be another blockbuster month for supply, with several $1 billion-plus deals on the shadow calendar, said Pat Luby, head of municipal strategy at CreditSights. 

The muni market is in a position to rally in the latter part of this year, said Daryl Clements, a portfolio manager at AllianceBernstein.