Primary bond market

Muni participants await a new month with growing issuance, but perhaps not quite enough as issuers are hesitant to add more debt before final word from Washington on infrastructure.

July volume was $31.9 billion keeping the annual pace ahead of last year's record-breaking total. Issuance still lags demand by a large amount — $60 billion by many accounts for August alone — as redemptions coupon payments pile up.

Washington GOs came at tighter spreads than a spring sale in the competitive market while sizable negotiated deals saw bumps in repricings. Refinitiv Lipper reported $1.4 billion of inflows in the 21st consecutive week.

The massive summer reinvestment into municipal bond mutual funds continue and are both sustaining the strength of investor demand and solidifying the technical footing of the market.

The economy continues to recover, with durable goods orders and consumer confidence suggesting strength, but concerns about the Delta variant of COVID-19 and continued supply-chain problems cloud the future outlook.

With municipal yields at exceedingly low absolute levels, the spread tightening between credits also continues.

The last week of July marks a lighter calendar while August redemptions are huge compared to the expected supply. Investors need to get in line and likely accept lower yields and continued historically low ratios.

Low ratios, low yields and massive demand are leading to a market that is mostly on its own. Refinitiv Lipper reported $1.7 billion of inflows.

The larger new issues and aggressive swings in taxables had investors on guard as triple-A curves were pressured outside 10-years, but the asset class still vastly outperformed UST while ICI reports nearly $3 billion more inflows.

Negotiated deals were repriced to lower yields while competitive deals saw levels coming in through triple-A benchmarks. High-grade benchmarks were little changed.

The prominent Chicago health system's refunding will simplify its debt structure, cut interest rates, and provide longer-term fixed financing.

Municipal triple-A benchmarks were pushed to lower yields by one to three basis points across the curve, with the bigger moves out long, but still vastly underperformed the 10-plus basis point moves in UST.

Supply, however, is still less than the massive amounts of cash on hand. Bond Buyer data shows 30-day visible supply at $12.53 billion.

Spreads for the Metropolitan Pier and Exposition Authority, which manages Chicago's convention center, narrowed in an $811 million deal that priced Thursday.

U.S. Treasuries have been volatile the past five sessions, with municipals largely ignoring the ride. Participants mostly have accepted current rates and ratios as large amounts of cash slosh around a market with strong technicals.

Honolulu plans to price $725.4 million of double-A-plus GOs next week; a significant chunk of the deal will support Oahu's troubled rail transit project.

Perform, a portfolio management platform for institutional investors who want to accesses the municipal bond market, will be integrated into ICE Bonds.

A key demand component in the market again flexed its muscles with ICI reporting another round of $2 billion-plus fund inflows.

Municipals outperformed U.S. Treasuries for a third sessions moving the 10-year municipal to UST ratio below 60%.

The Metropolitan Pier and Exposition Authority and the Illinois Sports Facilities Authority are heading into the bond market, buoyed by state rating upgrades.