Primary bond market

Bids wanteds are on the rise, but a constructive secondary market showed a steady to firmer market in the past two sessions. ICI's latest outflows figure is the highest since June.

Triple-A yields fell four to 10 basis points across the curve amid robust secondary trading with high-grade names showing clear moves to lower yields.

Munis open October firmer, underperforming a UST rally, but September closed out the month with 3.84% losses — the single largest monthly loss since September 2008.

Triple-A yields rose more than three-quarters of a point on the front end and nearly half a point out long in September as munis posted 3.84% losses.

For the first three quarters, total issuance sits at $308.440 billion, down from $361.932 billion in 2021. Taxables are down 48.0% to $45.724 billion from $87.979 billion.

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In the competitive market Thursday, the New York Urban Development Corp. sold $1.443 billion of tax-exempt personal income tax revenue bonds.

The state spreads landed wide compared to a May sale, but remained far narrower than early in the pandemic and during the state's two-year budget impasse.

A larger new-issue slate led by large deals from the Texas Water Development Board and state of Illinois took focus away from the secondary.

Elevated secondary selling pressure on Tuesday forced more losses. Triple-A yields rose by as many as seven to eight basis points across the curve, moving the entire triple-A curve above 3% and the 30-year a dozen basis points shy of 4%.

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Bids wanteds have been elevated, municipal bond mutual fund outflows large and consistent and the short end of the U.S. Treasury curve continues its march upward, moves that muni investors cannot ignore.

Guilford County's request for a $1.7 billion voter-approved bond package, however, was put on hold until the next Local Government Commission meeting.

Triple-A yields rose 11 to 15 basis points five years and in.

"We really have worked hard during this strong stretch here of economic performance over the last 18 months or so to really kind of address some of those lingering debts we inherited," said Illinois Office of Management and Budget Director Alexis Sturm.

Retail investors may be moving out of municipal bond mutual funds and into separately managed accounts, largely due to the headline shock of the massive outflows from the funds, participants say.

One-year rates have risen 100 basis points, intermediate maturities have traded up about 25 basis points and long-term munis are nearly 50 basis points above June's close.

Munis were little changed while long UST improved and equities ended in the red after the FOMC raised the fed funds rate target 75bps to a range of 3% to 3.25% and members are leaning toward a rate of 4.4% by yearend.

S&P upgraded the bonds to AA-plus and Fitch revised the outlook on the AA-rated debt to positive from stable.

Short triple-A yields have risen more than 30 basis points over the past eight sessions while the long bond has risen 19, per Refinitiv MMD data.