Primary bond market

Issuers routinely refund 5% bonds in year 10, and the resulting savings can be significant. It is notable that although refunding is typically associated with declining interest rates, 5% bonds are refunded even if rates rise.

"We're seeing some of the additional instability and other things come into play," said Dan Genter, CEO of Genter Capital Management.

"Light demand" for Wednesday's 20-year Treasury bond auction "propelled yields to the nosebleeds and equities to the basement," said José Torres, senior economist at Interactive Brokers.

The "risk to the tax exemption appears to have dropped sharply as of last week ... taking with it the hypothetical risk of a supply surge ahead of any end-date for borrowers' exemption access," said Matt Fabian, a partner at Municipal Market Analytics.

"Munis are no longer moving on headlines; they're reacting to rates and supply," which is playing out again Monday after a choppy March and April, said James Pruskowski, chief investment officer at 16Rock Asset Management.

Municipals were cut up four basis points, depending on the curve, through noon.

Issuance for the week of May 19 is estimated at $11.667 billion.

A couple of "bond-friendly" economic reports released Thursday could encourage the Federal Reserve to reduce interest rates in the near future, some analysts argued.

Strong enplanement growth, an expansive number of days of cash on hand and low costs outweigh credit concerns, analysts said.

While April was a challenging month for muni performance, this summer will be a more supportive environment, said Mark Paris, chief investment officer and head of municipals at Invesco.