Secondary bond market

Tax risks continue to linger as they are preserved as a potential offset for whatever level of spending all 50 Democratic senators can agree to, but potential approval of the legislation remains a question mark.

U.S. Treasuries saw losses pushing municipal to UST ratios on the 10- and 30-year lower again.

The Build Back Better in its current form essentially has been killed by Sen. Joe Manchin, likely limiting the potential for tax hikes in the coming year.

Municipal volume is estimated at a lean $558.8 million with $494.7 million of negotiated deals and $64.2 million on the competitive slate. Thirty-day visible supply is at $3.17 billion.

Despite outside pressures, municipal fundamentals are strong with improving credit pictures, issuers flush with federal cash and the ongoing supply-demand imbalance.

The index, which tracks over 2,800 securities, went live Wednesday. While ESG investment considerations have grown around the globe, the muni market is at the beginning stages and there is no universally accepted definition of ESG.

It marked the 40th straight week of positive flows into the long-term funds and brought the total inflows for this year near $82 billion. Exchanged-traded funds saw $168M of inflows.

Over the past year, Lumesis has expanded the capabilities of its DIVER suite of muni-focused business and regulatory solutions.

Triple-A yield curves were unchanged on the day and mostly have not budged but a basis point in spots since the end of November.

Coming off last week's $19.5 million influx of weekly new issues, supply this week is lower as the market watches the Federal Open Market Committee meeting.

There are $8.127 billion of negotiated deals on tap and a mere $367.4 million of competitive loans slated, none over $100 million. Thirty-day visible supply totals $9.9 billion and net negative supply is at $8.4 billion.

Municipal yield curves were little changed for the seventh straight session while Refinitiv Lipper reported the 40th week of inflows into municipal bond mutual funds, with high-yield seeing a large increase week over week.

The Investment Company Institute reported $289 million of inflows into municipal bond mutual funds in the week ending Dec. 1, down from $965 million in the previous week.

Thirty-day visible supply drops to $13.54 billion with still a large chunk of new issues to be priced Wednesday and Thursday.

The municipal market is poised to absorb the late-year burst of supply as market technicals are expected to remain positive through year end.

The weaker-than-expected employment report sent U.S. Treasury yields lower and equities sold off. Munis did what they've been doing — mostly ignored it.

Refinitiv Lipper reported a significant drop in municipal bond mutual fund inflows at $36 million in the latest week, a signal the volatility of other markets may be creeping in. High-yield saw $53 million of inflows.

The Investment Company Institute reported $974 million of inflows into municipal bond mutual funds in the week ending Nov. 23, down from $1.430 billion in the previous week.

Powell says the FOMC will consider ramping up tapering when more information about Omicron and its impacts are known, further flattening the UST yield curve.

Economists appear to be less concerned about Omicron, with some saying that even if the variant causes another pandemic wave, it is more likely to "slow rather than interrupt" the global economic recovery.