Primary bond market

Mayor Eric Adams’s proposal to ask the state to raise the Transitional Finance Authority’s bonding authority by $19 billion is being opposed by Comptroller Brad Lander.

Supply is beginning to roll in and the primary action on Wednesday provided more direction. ICI reports $1.4 billion of inflows.

The financing will help pay for upgrades that will keep the Cleveland Guardians at Progressive Field through 2036.

“We are anticipating a substantial present value savings as a result of our being proactive,” said the spokeswoman for state Treasurer John Schroder.

Federal Reserve Board Chair Jerome Powell would not commit to timing for liftoff, stressing decisions would be data-based and the Fed will not allow inflation to become entrenched.

Chicago Public Schools returns to the market after resolving a union dispute that shuttered schools amid the spreading omicron COVID-19 variant.

Pressures from inflation concerns and broader rising rates weigh on munis in the second week of 2022.

Munis followed UST weaker while stocks sold off after the employment report, which offered many messages. Analysts believe the bottom line is the Fed will liftoff in March.

The Federal Reserve expects Omicron to fizzle in weeks, and while pandemic-related risks remain, the economy is strong and the Fed needs to address inflation and could liftoff as soon as March, Bullard says.

ICI reported $1.101 billion of inflows into municipal bond mutual funds for the last week of 2021. Refinitiv Lipper figures on Thursday may give a sense of investor sentiment for week one of 2022.

The U.S. Treasury selloff caught up to tax-exempts with two to three basis point cuts to scales, but munis still outperform.

Municipals triple-A benchmarks continue the trend of ignoring other markets to start 2022. The new year will likely usher in slower growth and continued inflationary pressures, analysts said.

Municipal volume is estimated at $1.13 billion for the opening week of 2022. Persistently strong net supply challenges will bias credit spreads tighter, credit discipline weaker in the next few years, analysts say.

2022 volume projections are clouded by many uncertainties. What is not murky is that demand for municipals is unlikely to fade.

A HilltopSecurities survey found skilled nursing and senior living as the sectors they were most concerned about for 2022.

Investors will also receive $139 billion of interest payments in 2022, about $593 million more than in 2021, according to a report from CreditSights.

Until supply comes, market participants appear to be content to sit back and let the calendar flip to a new year without making any big moves.

Municipals are sitting out the ups and downs in equities and UST, with $12 million scheduled for the primary in the final week of 2021.

Tax risks continue to linger as they are preserved as a potential offset for whatever level of spending all 50 Democratic senators can agree to, but potential approval of the legislation remains a question mark.

The Build Back Better in its current form essentially has been killed by Sen. Joe Manchin, likely limiting the potential for tax hikes in the coming year.