Primary bond market

New-issue volume grows to $10.7 billion led by a $2.7 billion taxable Massachusetts ESG deal, $1.35 billion of Oklahoma natural gas taxables, $1.25 billion from the Regents of the University of California and $1.1 billion from New York City.

"I think this deal is kind of like football in the pre-season," says County Comptroller Kevin Hardwick. "We're looking at this new issue as a run-up to next year — the big event — when we hope to be bonding for our new stadium for the Buffalo Bills."

Massachusetts had temporarily delayed the $2.7 billion sale as state lawmakers debated additional funding for the state's unemployment trust fund.

Pressure on the short end of the muni curve is being exacerbated by a 3.24% two-year Treasury note, from a correction to floating rate notes and dealer positions.

The debt issued through conduit Gallatin County, Montana, benefits an aerial firefighting company that went public through a SPAC weeks after the bonds sold.

The Investment Company Institute reported investors poured in $1.589 billion into muni bond mutual funds in the week ending August 3, the highest level since November.

Several large new issues priced. Municipal yields were little changed, U.S. Treasuries were weaker on the short end and stocks ended in the red ahead of the much-anticipated July inflation figure.

Weekly supply is holding below $5 billion, reinvestment needs are still in effect from large redemptions and fund flows are leaning more positive, noted FHN Financial's Kim Olsan.

Moody's revised Cook County, Illinois' outlook to positive ahead of its mix of sales tax-backed and general obligation bond deals.

Investors will be greeted Monday with an increase in supply with the new-issue calendar estimated at $5.941 billion, up from total sales of $1.700 billion.

Investors poured $1.094 billion into municipal bond mutual funds in the latest week, versus the $236.491 million of inflows the week prior. It marks only the second time this year inflows eclipsed $1 billion.

The Investment Company Institute reported investors pulled $246 million out of muni bond mutual funds in the week ending July 27 compared to the $602 million of outflows in the previous week.

Since 2011, the city has issued about $5.6 billion of debt, with the most issuance occurring in 2021 when it sold $785 million.

The large primary was led by two $700-plus million of revenue bonds from the Port of Seattle and the Georgia Ports Authority.

Summer redemption season starts winding down; Net negative supply stands at $18.777 while 30-day visible is at $12-plus billion.

Municipals will end July with positive returns across all sectors. The Bloomberg Municipal Index shows a 2.49% return in July, moving year-to-date losses lower to 6.71%.

The deal is the latest in a series of credit offerings the city is using to incentivize and grow the local charter school industry for the future.

Total July volume was $25.598 billion in 520 deals versus $37.573 billion in 1,013 issues a year earlier, according to Refinitiv data.

Investors added $236.491 million to municipal bond mutual funds, per Refinitiv Lipper data, versus the $698.782 million of outflows the week prior. High-yield saw inflows hit nearly $550 million.

Municipals are poised to end July in the black. Demand for muni product has been strong this summer, with analysts expecting supportive market technicals through August with a likely continuation of positive performance.