Primary bond market

Refinitiv Lipper reported $116.737 million was pulled from municipal bond mutual funds for the week ending Wednesday after $798.474 million of outflows from the funds the previous week.

There hasn't been a huge return of capital in the muni market so far this year, with fund flows being rather anemic, said Chad Farrington, co-head of municipal bond strategy at DWS Group.

While supply this week is "softer," uncertainty and volatility may prevail once more due to "yields still not exciting longer-term investors," said Matt Fabian, a partner at Municipal Market Analytics.

Munis have had a slow start "down roughly 0.25% for the first week of September bringing year-to-date returns to 1.34%," said Jason Wong, vice president of municipals at AmeriVet Securities.

Historically, "September and, to a lesser degree, October have not been kind to municipal investors."

Refinitiv Lipper reported $798.474 million was pulled from municipal bond mutual funds in the week ending Wednesday after $407.976 million of inflows into the funds the previous week.

With around 30% of bonds trading near the de minimis threshold, a new study takes a deep dive into how the rule drives illiquidity as mutual funds dump paper that's approaching the threshold.

California and the Port Authority of New York and New Jersey held one-day retail order periods for $1 billion-plus issues.

Investors remain hesitant about "jumping back into munis even as rates are nearing multi-year highs as tax-exempts are still not cheap enough with the front-end ratios still yielding under 70% while the historical averages are around 90%," AmeriVet Securities' Jason Wong noted.

The calendar will rebound with an estimated $7.141 billion next week with $6.323 billion of negotiated deals on tap and $817.6 million on the competitive calendar.

Refinitiv Lipper reported $407.976 million of inflows from municipal bond mutual funds for the week ending Wednesday after $534.428 million of outflows into the funds the previous week.

"We've seen more buyer attention at this time of the year versus what we generally would experience as we approach the beginning of September," said Morgan Stanley's Matthew Gastall.

Over the last month or so there's been some volatility in the muni market driven by the Treasury side, said Daryl Clements, municipal portfolio manager at AllianceBernstein.

The muni market "finally succumbed to the month-long rate selloff that had seen valuations test historically rich levels," said Birch Creek Capital strategists in a weekly report.

While muni buyers will see a meager slate of new issues this week, Jacksonville, Florida, heads to market with a sale of over $290 million of revenue and refunding bonds.

The new-issue calendar for the final week of August is estimated at a meager $2.979 billion. Bond Buyer 30-day visible supply sits at $5.76 billion.

Refinitiv Lipper reported $534.428 million of outflows from municipal bond mutual funds for the week ending Wednesday after $264.046 million of outflows into the funds the previous week.

Supply scarcity is helping the market through the Treasury volatility. Bond Buyer 30-day visible supply currently sits at $4.72 billion.

This week's new-issue supply needs to be "priced to sell to pique investor interest," said noted Nuveen's Daniel Close and Anders S. Persson.

The State Trunk Line Fund deal is the latest to fund the state's $3.5 billion bond authorization for highways. After this deal $700 million remains.