Primary bond market

A key demand component in the market again flexed its muscles with ICI reporting another round of $2 billion-plus fund inflows.

Municipals outperformed U.S. Treasuries for a third sessions moving the 10-year municipal to UST ratio below 60%.

The Metropolitan Pier and Exposition Authority and the Illinois Sports Facilities Authority are heading into the bond market, buoyed by state rating upgrades.

Most participants expect better performance for munis in the near-term. Longer-term, a lot depends on rates, COVID and other outside factors, such as infrastructure.

While municipals hit the pause button Friday, the movement in yields in the first week of July marked the largest one-week decline in 2021.

Fund inflows are a demand component unlikely to slow during the heavy reinvestment season, keeping the yield environment squarely in issuers' favor.

The Fitch Ratings upgrade applies only to GO debt — the city's issuer default rating remains AA-plus. The GOs benefit from California’s 2016 statutory lien law.

The Dormitory Authority of the State of New York overtook California for the most issuance, while New York issuers made up half of the top 10.

More of the same from the FOMC did little to move UST or munis. ICI reported the 17th consecutive week of inflows at $1.98 billion. July is looking good for municipal issuers.

As issuance increased, the top municipal bond underwriters saw their total par underwritten rise by 14.4% from the first half of 2020.