Primary bond market

"Yields are attractive, and there's going to be a lot of demand and there's not going to be a lot of bonds," said Scott Diamond, co-head of the municipal fixed income team at Goldman Sachs.

A private school catering to Los Angeles' wealthiest residents is tapping the municipal bond market to expand its campus and add to its academic offerings. 

"The market seems to be coalescing around the view that these historically rich ratios can be sustained through February, but that the market technical becomes far less favorable in March and April," said Birch Creek Capital strategists in a report.

The deal comes following several toll increases — which have bolstered the authority's credit — that have also compelled a state senator to introduce a bill that would dissolve the authority.

BofA expects muni yields to continue to move up and credit spreads to narrow "in a slow and gentle fashion" in February.

LSEG Lipper reported Thursday that investors added $210.6 million to municipal bond mutual funds for the week ending Wednesday — the third consecutive week — after inflows of $898 million the week prior.

As ridership remains low, investors are closely watching for new funding streams and credits like the MTA's planned congestion tax-backed bonds.

Despite fixed-income seeing losses this month, Jeff Lipton, managing director of credit research at Oppenheimer, believes "a performance sea change is nearing."

After the year-end rally, "2024 bond investors have been reluctant buyers, prices creeping lower perhaps until the data and the Fed's next steps are more clear," said Matt Fabian, partner at Municipal Market Analytics.

This week's heavy new-issue calendar of tax-exempt supply "could lead to a modest cheapening of ratios," said Vikram Rai, head of municipal markets strategy at Wells Fargo.

The top bond counsel in 2023 handled a combined $361.721 billion across 7,164 bond issues versus $359.189 billion in 7,882 transactions in 2022. 

Growing new-issue supply is "adding to bidders' 'wait-and-see' mentality with a variety of credits coming to market at favorable spreads," said FHN Financial's Kim Olsan. Next week's calendar hits $8.4 billion.

Muni yields rose up to eight basis points, depending on the scale, while UST yields rose up to six basis points at 30 years.

Smaller issuers will find it easier to tell their stories to investors who are looking to customize their portfolios.

The Investment Company Institute Wednesday reported large inflows into municipal bond mutual funds, with investors adding $2.066 billion to funds, while exchange-traded funds saw $1.082 billion of outflows for the week ending Jan. 10.

The state of Wisconsin is embarking on a flurry of debt-related activity as the year begins, with a cash defeasance and three refunding deals on the table.

Munis have "struggled to get out of starting gate" to start 2024 as munis are returning negative 0.24% so far this year, said Jason Wong, vice president of municipals at AmeriVet Securities.

Bonds issued through the Westchester County Local Development Corp. will create a centralized base for the nonprofit's blood distribution and lab operations.

Proceeds from the PMT green bond sale will be used to finance transit and commuter projects that have been approved in the N.Y. MTA's capital programs.

The tax-exempt market could also see pressure due to "heavy issuance, anemic flows, and rate volatility," according to Barclays PLC.