Secondary bond market

A trio of municipal bond analysts say now is the time for investors to take advantage of the strength and resilience of the asset class.

Moody’s followed S&P in lifting Illinois’ outlook to stable, where it stood before the COVID-19 pandemic, but a lot more needs to happen for an upgrade.

Both personal income and expenditures dropped in February, while personal consumption expenditures also came in weaker than expected, meaning inflation remains in check for now.

Refinitiv Lipper reported more inflows into municipal bond mutual funds to the tune of $592.4 million. Initial jobless claims fell to the lowest point since the pandemic began, moving Treasuries weaker while equities saw gains.

ICI reported another week of inflows at $2.23 billion. U.S. Treasuries strengthened further as COVID-19 concerns linger with shutdowns in Germany and spreads elsewhere. Equities were mixed.

The primary led the secondary to lower yields as UST 10-year fell to lows last seen a week ago. Regional service sector surveys released Tuesday showed improvement, which feeds into the belief that inflation will rise in the near term.

Monday’s economic data suggested weakness, with existing home sales declining for the first time in four months and the Federal Reserve Bank of Chicago’s National Activity Index slipping into negative territory, but economists are not concerned.

Exactly one year after record billions were pulled from municipal bond mutual funds and the market was in free fall, municipals followed U.S. Treasuries this week as the markets continued to dismiss the Fed's outlook on inflation and rates.

The rise of machine learning. Continued growth of electronic trading. Intensifying automation. Stephanie Sparvero, Global Head of BVAL Evaluated Pricing at Bloomberg, talks about these issues and more in how the muni market is charting a changing muni landscape. Lynne Funk hosts. (30 minutes)

A repricing of Illinois GOs saw the bonds bumped by 12 to 20 basis points from Tuesday's preliminary pricing wires and 17 to 25 basis points from Monday's price talk.