Primary bond market

The Investment Company Institute reported outflows of $336 million for the week ending Feb. 12, following $852 million of inflows the previous week.

Municipals were narrowly mixed to start the holiday-shortened week, but the lighter supply should buoy the market.

"This week's rate volatility made muni trading challenging as Treasury rates have been moving up and down abruptly on the back of inflation releases and tariff news," said Barclays strategist Mikhail Foux.

Investors added $238.5 million to municipal bond mutual funds in the week ending Wednesday, following $1.124 billion of inflows the prior week, according to LSEG Lipper data.

The legislation comes as the municipal market industry fends off threats to tax-exempt municipal bonds.

Inflation is front and center this week, with the consumer price index report released on Wednesday and the producer price index on Thursday.

Municipals were cut up to four basis points, depending on the scale, while UST yields rose up to four basis points out long.

Munis continue to outpace USTs as ratios on the front end continue to richen relative to USTs, Jason Wong said.

Yields have fallen over the past few weeks, so "any decent excuse that rates move up a little bit after that big rally" may have occurred as the market digested the report — which was a "little bit of a mixed bag" — after the initial headline figure, said Jeff MacDonald, EVP and head of fixed income at Fiduciary Trust International.

The NYC TFA will test how the national news cycle has affected the market's appetites. 

The Metropolitan Atlanta Rapid Transit Authority will issue $475 million in green sales tax revenue bonds for capital projects and refunding.

Muni yields were bumped one to eight basis points, depending on the scale, while UST yields fell three to 10 basis points, with the greatest gains out long.

Tax exemption concerns — though an elimination is unlikely — and the loss of federal stimulus will "most assuredly pull forward delayed issuance, with the first half of 2025 volume to exceed second half volume," said James Welch, a municipal portfolio manager at Principal Asset Management.

To close out the day, USTs remained mixed, with yields rising on the short end and falling out long, while munis were changed up to a basis point, depending on the curve.

January's municipal bond supply "will end up being heavier compared with the normally slow start of the year, but the pipeline should remain quite robust," Barclays said.

January's volume was $35.243 billion in 486 issues, up 10.8% from $31.817 billion in 554 issues in 2024, according to LSEG data.

The offering document for a White Lake Township bond sale sheds more light on the hack criminals used to intercept funds between the underwriter and borrower.

Investors added $741.7 million to municipal bond mutual funds in the week ending Wednesday, following $2.078 billion of inflows the prior week, according to LSEG Lipper data.

Even with the possibility of inflation and fiscal policy-induced headwinds, there is much to be optimistic about in the muni market, despite some possible near-term turbulence, said GW&K strategists.

The Fed meets this week, but the probability of another cut at Wednesday's meeting seems low amid elevated inflation and growth data, said Matt Fabian, a partner at Municipal Market Analytics.