Primary bond market

The Harris County-Houston Sports Authority's CEO was ousted and its chair faces ouster as it prices a $330 million deal to restructure its bond debt.

While the asset class is still in the red for October, it has pared back earlier losses. The Bloomberg Municipal Index is at negative 1.42% in October and positive 0.84% year to date.

The correction to the municipal market has improved muni to UST ratios while uncertainty hangs over ahead of the election. J.P. Morgan's Peter DeGroot said the firm expects the end of next week "will mark the end of the difficult technical period in 2024 and believe that net supply in November will lead to better valuations broadly in the municipal market."

While fundamentals remain strong — with credit upgrades outpacing downgrades by 3.5 times so far in 2024 — technical factors have been "less supportive," Principal Asset Management strategists said in a report.

"Coming off rich muni-Treasury ratios, the market has swiftly repriced," said 16Rock Asset Management's James Pruskowski. "With now cheaper benchmark yields and wider credit spreads, fresh capital is flowing in, and a strong bottoming opportunity looks to be emerging."

"The identity of the marginal buyer may be shifting, and with that the market's valuation of structure and liquidity," said Matt Fabian, a partner at Municipal Market Analytics.

Demand for munis remains "insatiable," said Daryl Clements, a municipal portfolio manager at AllianceBernstein.

Despite this week's underperformance, exempt investment-grade munis continue to outperform taxable sectors.

"Buyer interest comes as forward supply is projected around $20 billion (the high water mark over the last year) while offsetting calls and maturities sit about $2 billion lower, creating a net supply surplus," said Kim Olsan, a senior fixed income portfolio manager at NewSquare Capital.

The muni market enters the last quarter of 2024 in "excellent shape," said GW&K Investment Management partners John Fox, Brian Moreland, Kara South and Martin Tourigny.

Supply ramps up this week to an estimated $13.361 billion, with several billion-dollar pricings on tap.

The top 10 saw some shifts again.

As the underwriter landscape changes, so does the competitive market.

Municipal triple-A yield curves played catch up to USTs Friday to close out a week of more mixed economic data that has economists constantly reevaluating their Federal Reserve policy expectations with little consensus.

Municipal bond insurers wrapped $28.921 billion in the first three quarters 2024, a 26.8% increase from the $22.814 billion insured in the first three quarters of 2023, according to LSEG data.

Analysts remain divided about what the stronger-than-expected consumer price index will mean for Federal Reserve policymakers since the Fed appears to be concentrating on the labor market.

The Equitable School Revolving Fund will have 90 loans outstanding to charter schools across 23 states.

Chicago's City Council deferred a vote on a $1.5 billion bond measure.

With munis establishing "directional footing" in the fourth quarter of this year, the technical backdrop is still the market driver for 2024, said Jeff Lipton, a research analyst and market strategist.

Supply is slightly lower this week at nearly $10 billion but not by much, with the pace of supply suggesting $500 billion of issuance for the year could still happen, said Tripp Kaiser, a managing director at Municipal Market Analytics, Inc.