Primary bond market

Dallas Area Rapid Transit is enjoying a lift in tax revenues amid a drop in ridership during the pandemic.

The long end of the municipal curve rallied under a backdrop of stronger-than-expected October jobs data and upward revesions to the prior two months ahead of the arrival of $9.6 billion next week.

For 35 weeks in a row, investors have put cash into municipal bond funds as Refinitiv Lipper reported $603 million of inflows while high-yield funds eked out a gain of slightly more than $1 million.

After the FOMC made taper official, high-grade benchmark yields ended the day one to three basis points better while USTs ended the day higher after an up-and-down trading session that moved the 30-year back above 2%.

The FOMC will likely take the opportunity to profess its reliance on data to decide liftoff and reiterate the threshold for a rate hike remains higher than for taper.

The Illinois State Toll Highway Authority plans $600 million of borrowing next month and $500 million next year as its 15-year-old capital program remains in full speed ahead mode.

Though monetary policy has been in the forefront, at mid-month the tone changed with global inflation outlooks and federal infrastructure and social package in flux.

A lighter, $5 billion calendar, heavy on healthcare, kicks off November. Most participants agree volatility in U.S. Treasuries will be a leading factor for municipal market performance. Uncertainty in Washington also isn't helping the asset class.

Key institutional players like banks and insurance companies may have less incentive to buy tax-exempt munis if the provision becomes law.

Amid a flattening municipal yield curve and inversion of the Treasury market, new issues fared better than the secondary on Thursday as participants prepared for month end.