Primary bond market

"Munis are no longer moving on headlines; they're reacting to rates and supply," which is playing out again Monday after a choppy March and April, said James Pruskowski, chief investment officer at 16Rock Asset Management.

Municipals were cut up four basis points, depending on the curve, through noon.

Issuance for the week of May 19 is estimated at $11.667 billion.

A couple of "bond-friendly" economic reports released Thursday could encourage the Federal Reserve to reduce interest rates in the near future, some analysts argued.

Strong enplanement growth, an expansive number of days of cash on hand and low costs outweigh credit concerns, analysts said.

While April was a challenging month for muni performance, this summer will be a more supportive environment, said Mark Paris, chief investment officer and head of municipals at Invesco.

The muni market is recovering from tariff turmoil, and is more resilient than the day-to-day volatility suggests, Jamie Doffermyre of Truist Securities said.

Even with Monday's U.S.-China tariff truce and Tuesday's inflation print, the market has felt better over the past several weeks, said Jamie Iselin, managing director and head of municipal fixed income at Neuberger Berman.

The $839.5 million Harris County Hospital District bond sale will tap $2.5 billion of voter-approved debt authorization for a $3.2 billion expansion project.

Munis yields followed UST yields higher Monday, rising one to four basis points, depending on the scale, but the asset class outperformed USTs.

Chicago released a request for qualifications for underwriting services on April 30, seeking to form new pools from which to choose firms to handle their bond sales.

"In our view, the worst for munis is behind us, at least for now; tax-exempts might continue to outperform, but only to a degree as technicals will remain somewhat challenging," Barclays strategists said.

The recent firmness in the market has been "much appreciated," said Shannon Rinehart, senior portfolio manager of municipal debt at Columbia Threadneedle Investments.

The third-most-populous Louisiana city is closing out a 2021 bond authorization, but has plenty left from a 2024 bond referendum.

Charlotte will sell $330 million of bonds and Duke Health will offer $540 million.

Muni yields remain attractive, said Tom Kozlik, managing director, head of public policy and municipal strategy at HilltopSecurities.

Harvard University's ongoing legal battles and the return to market by Chicago's Regional Transportation Authority lead a host of municipal topics in April.

Focus was on the primary market last week, with Birch Creek reporting that one dealer estimated that 90% of the focus earlier in the week was on new issues.

"For munis, a strong jobs report should reverse recent credit spread widening, while a weak jobs report should keep credit spreads around current levels," said BofA strategists.

Compensation played a role in the departures, sources said.