Primary bond market

The U.S. Treasury 10-year dipped to its lowest yield since March while municipal investors poured money into new deals and secondary trading helped push benchmarks even lower.

The Wayne County Airport Authority is selling $163 million to finance projects.

The market idled Monday while investors prepare for a $12 billion new-issue onslaught that brings diversity of credits that will help direct benchmark yields. Continued fund flows are needed to sustain current yields.

Muni prices were firm Friday after the employment report showed nonfarm payrolls rose 559,000 in May as the jobless rate fell to 5.8%.

Raymond James is senior manager for the sale, which will feature $82 million of Series B tax-exempt and $17 million of Series A federally taxable bonds.

As most participants await Friday's jobs report, the municipal market Thursday sustained a firm tone as rates remained on a gradual path of decline.

ICI's report marks the 12th consecutive week of inflows bringing the total for 2021 to more than $40 billion. Lower- and non-rated deals saw 20 to 30 basis point bumps in repricings as any paper with yield is massively oversubscribed.

The state's general obligation bonds are rated triple-A by Moody's, S&P and Fitch.

The revenue sector winners in May included healthcare with +0.53% gains, transportation with +0.42%, each benefiting from "the reach for yield and improving metrics," analysts said.

Sheila King of Eagle Asset Management talks with Chip Barnett on the growing importance of environmental, social and governance issues for municipal governments. She gives examples of what works and what doesn't and why it matters. (14 minutes)

Municipal yields will likely stay in a narrow range with trading activity subdued unless larger interest rate volatility unexpectedly sets in, analysts say.

The agency is refunding $104.5 million of Federal Transit Administration section 5307 bonds and $23 million of FTA section 5337 bonds.

Even with a 23.3% year-over-year drop in May, with five months now officially in the books, long-term muni volume stands at $169.45 billion, ahead of the $157.96 billion issued in 2020.

The fundamentals of the muni market have investors stuck in a low-rate environment without much of an alternative. Refinitiv Lipper reported $1.466 billion of inflows into municipal bond mutual funds with $813.8 million into high-yield.

A reported preliminary 25.8% drop in May issuance shows how strong fund inflows, improving credit and the reopening of governments are keeping the muni market issuer friendly.

Triple-A municipal benchmark yield curves were bumped one to two basis points, lagging a four basis point rally in U.S. Treasuries after weaker consumer sentiment and dovish comments from Fed officials moved equities lower.

Municipals saw little activity on Monday as the market prepped for the bulk of the week's $7B primary calendar arriving Tuesday and Wednesday.

Strong technicals have been the theme, and with federal aid and better-than-expected tax receipts coming in, issuers are not tapping the market as much as investors would hope.

Analysts are taking the view that muni investors expect higher taxes and are brushing off inflation concerns. U.S. Treasuries are another story.

The Investment Company Institute reported another week of inflows, but at a lower clip than recent weeks with $541 million coming into municipal bond mutual funds.