Primary bond market

The City Council will vote Tuesday night on whether to approve bonds for the formerly stalled project.

Municipals' strong fundamentals and high credit quality combined with market inefficiencies and dislocations present opportunities.

Yields on top-rated municipal bonds fell as much as nine basis points on Friday as bank contagion fears resurfaced and investors looked to safe-haven securities. The primary calendar is rebounding, with volume rising to an estimated $5.4 billion in the week ahead.

Outflows continued as Refinitiv Lipper reported $427.082 million was pulled from municipal bond mutual funds in the week that ended Wednesday after $461.123 million of outflows the week prior.

"In short, it appears that the end of the current tightening cycle is coming into view," said Wells Fargo Securities Chief Economist Jay Bryson.

After a tumultuous week, expect another ahead, said Matt Fabian, a partner at Municipal Market Analytics.

The state plans to enter the market before the fiscal year closes June 30th with eyes turned to Fitch and whether it will follow Moody's and S&P with an upgrade.

The banking sector crisis caused a flight-to-quality bid in USTs last week.

Investors will be greeted Monday with a new-issue calendar estimated at $4.064 billion.

The collapse of Silicon Valley Bank and Signature Bank clouds the economic landscape and complicates monetary policy decisions but it's a long way off from the troubles banks and broker-dealers faced in the 2008 financial crisis.

Outflows continued as Refinitiv Lipper reported $461.123 million was pulled from municipal bond mutual funds in the week that ended Wednesday after $307.815 million of outflows the week prior.

"The main question for investors recently has been: will we see bank selling of municipals that exerts pressure on the market, and what kind of market effects could occur," Barclays strategists said.

"The muni market is no different than others, where fear and greed drive the trends," said Peter Delahunt, StoneX's managing director.

The transportation revenue bond sale comes as legislative work on a new budget package is ramping up with the GOP expected to craft its own operating and capital spending plans.

Triple-A benchmarks have fallen five to 10 basis points, depending on the scale.

Investors will be greeted Monday with a new-issue calendar estimated at $6.041 billion.

A $3.52 billion Texas Natural Gas Securitization Finance Corp. deal includes a make-whole redemption over three years to call bonds if the state appropriates funds to pay them off.

Outflows continued as Refinitiv Lipper reported $307.815 million was pulled from municipal bond mutual funds in the week that ended Wednesday after $905.030 million of outflows the week prior.

Outflows lessened, with the Investment Company Institute reporting investors pulled $344 million from mutual funds in the week ending March 1, after $1.148 billion of outflows the previous week.

The two-year UST is now a full point above the 10-year UST, something that hasn't happened since 1981.