Secondary bond market

Municipals are coming off a rally and yields were better in spots Monday, but ratios are a cause for pause.

For the week ending Wednesday, outflows lessened as Refinitiv Lipper reported $91.713 million was pulled from municipal bond mutual funds after $194.097 million of outflows the week prior.

Outflows continued with the Investment Company Institute reporting investors pulled $128 million from mutual funds in the week ending March 29, after $693 million of outflows the previous week.

Outside of economic data, "a light forward calendar is driving strong demand in the secondary market and with new issues, with some deals being significantly oversubscribed," SWBC's Roberto Roffo said.

For four consecutive weeks, triple-A yields have fallen, and munis returned over 2.2% for the month, "a great reversal from February where munis returned a loss of 2.26%," said AmeriVet Securities' Jason Wong.

"Folks are aware of possible pressure that could weigh on the market, but attitudes are still generally more constructive than negative at this time," says Tom Kozlik of HilltopSecurities. 

Outflows continued as Refinitiv Lipper reported $194.097 million was pulled from municipal bond mutual funds in the week that ended Wednesday after $427.082 million of outflows the week prior.

Outflows continued, with the Investment Company Institute reporting investors pulled $693 million from mutual funds in the week ending March 22, after $684 million of outflows the previous week.

Munis are directionally trading with USTs but underperforming in days where USTs rally and outperforming in days where USTs sell-off, said Greg Gizzi, head of U.S. fixed income and head of municipal bonds at Macquarie Asset Management.

Munis held "their firmer tone as Treasuries continued to rally once more this past week," said Jason Wong, vice president of municipals at AmeriVet Securities.