Secondary bond market

The upcoming Federal Open Market Committee meeting on Tuesday and Wednesday has led to a lighter new-issue calendar with $2.72 billion on tap.

Municipal to UST ratios have risen this week with the 10-year approaching 90% and the 30-year topping 100%.

Outflows continued as investors pulled $3.876 billion from mutual funds in the week ending Oct. 19 after $4.532 billion of outflows the previous week, according to the Investment Company Institute.

While muni performance has turned negative for October, "the asset class is significantly outperforming UST," said Jeff Lipton, managing director of credit research at Oppenheimer Inc.

"Municipal market performance has improved, but the bumpy road continues as investors remain uncertain about the interest rate environment," said Nuveen's Head of Municipals John Miller.

Selling pressure was on the rise again this week. Thursday's $2.919 billion of bonds out for the bid was only surpassed on March 19, 2020, when they hit $4.115 billion. A larger calendar closes out October.

"The curve slope has undergone a massive flattening this year and recent trends suggest demand pockets are developing in specific ranges," said Kim Olsan, senior vice president of municipal bond trading at FHN Financial.

Outflows continued as investors pulled $4.532 billion from mutual funds in the week ending Oct. 12 after $5.172 billion of outflows the previous week, according to the Investment Company Institute.

Triple-A curves were a touch firmer in spots as secondary trading took a backseat to the larger primary activity with Connecticut and Massachusetts pricing general obligation bonds, a large CommonSpirit healthcare and several competitive issues led by Rhode Island GOs.

Volume rebounds eightfold this week with a new-issue calendar of $8.5 billion, including several billion-dollar deals.