Primary bond market

Muni benchmarks were steady while new deals re-priced to lower yields in a tale of two markets. ICI reported more inflows.

Strong technicals, low supply, yield-seekers keep munis outperforming.

The primary's diversity of credits and size relative to November has grown, but it is just not enough to push yields higher as redemptions flood the market. Some analysts still say a mild correction at least is due.

A heavier calendar still will not fulfill the $20 billion-plus of December redemptions. Muni/UST 10-year ratios fell to 74% as the UST 10-year came closer to 1.00%.

Difficulty tracking securities means a harder time for investors to understand their credit risk during the pandemic.

Refinitiv Lipper reported inflows of net $201 million for the week ending Dec. 2, down from $386 million the week prior.

Until supply increases, year-end demand has munis outperforming. ICI reports another multi-billion week of inflows.

Florida’s privately owned passenger train company, which halted service citing the coronavirus pandemic, is bringing $950 million of nonrated private activity bonds.

Munis are likely to lag Treasuries in some fashion once year-end empathy settles in mid-month and ratios become a factor.

Although November posted the lowest monthly volume total this year, issuance has already exceeded 2019's total and is on track to set a new yearly record in 2020.

After volume in November came in around $19 billion, the lowest since 1999, investors look to December.

The Regional Transportation District will issue $340 million for Denver Transit Partners, the concessionaire of three Denver-area commuter rail lines for RTD.

Michael Chalker, portfolio manager and senior analyst at LM Capital Group, talks with Chip Barnett about the fixed-income markets and the fallout from the COVID-19 pandemic. (16 minutes)

Illinois will borrow $2 billion through the Federal Reserve's Municipal Liquidity Facility to help manage its 2021 budget gap. The state previously borrowed $1.2 billion from the MLF for its fiscal 2020 pandemic hole.

The Investment Company Institute reported municipal bond funds saw $2.675 billion of inflows in the latest reporting week.

Fitch Ratings cited concerns about LADWP's debt leverage in setting a negative outlook.

Sources said the JFK deal was massively oversubscribed, allowing underwriters to lower yields from 15 to 45 basis points.

Municipals held firm ahead of this week's new issue slate, which features deals from issuers in New York and Texas. Treasuries weakened as stocks rose on positive coronavirus news.

Selling in a week with an expected light calendar should help the deal as will market fundamentals.

Municipals continue to rally as market participants get ready to head into a quiet holiday week.