Secondary bond market

High-grade deals priced and secondary trading showed bonds exchanging hands at yields higher than triple-A benchmarks in some cases, but a healthy two-way flow was evident, even if there are signals that yields have not yet hit a ceiling.

Data released Monday showed economic strength with further improvement ahead. U.S. Treasuries were off by five basis points but municipals saw aggressive eight to 10 basis point swings to higher yields across the curve.

Muni yields rose another five basis points on the 10- and 30-year, bringing the total cuts to scales to 18 and 17 basis points, respectively, from Tuesday as the asset class moved closer to UST movements after lagging that market since the start of the year.

Muni yields have climbed double-digit basis points in a week but technicals remain strong. Refinitiv Lipper reports $1.96 billion of inflows into municipal bond mutual funds.

The municipal secondary gave way to higher-yields and triple-A benchmarks rose two to five basis points. U.S. Treasuries pared back Tuesday's losses, even on the heels of better economic data.

With the U.S. Treasury sell off, municipal to UST ratios fell below 55% in 10-years.

Refinitiv Lipper reported $2.64 billion of inflows into municipal bond mutual funds. The overwhelming demand for the large deals priced this week demonstrates the flood of available cash that continues to support a strong market.

While most observers expect inflation to grow as the economy heals, the latest CPI numbers suggest that it hasn't yet arrived.

Even if there was some hesitation in the past few sessions to accept lower municipal yields given rich valuations, municipals continue grinding lower. One- and two-year AAA yields hit record lows of 0.06% and 0.08%, respectively.

Why has inflation remained low and how will the economic recovery impact it? Several experts offer their views as to whether inflation is or will be a problem.

The January employment report headline number disappointed while stimulus news lifted equities and U.S. Treasuries rose on both counts. Municipals ignored those moves ahead of another week of less-than-ample supply.

No rate hikes in sight as employment continues to struggle and inflation should rise this year, but not enough to force the Fed to raise rates.

Lumesis' president, COO and co-founder Tim Stevens talks about how AI complements the company’s pricing and scales software to predict the shape of a deal-specific municipal yield curve based on the structural and credit-characteristics and to use that predicted shape to fill-in portions of a yield curve that cannot be built from traditional means. Lynne Funk hosts. (35 minutes).

ICI reports a third week of $3-plus billion of inflows. Couponing is becoming as much a factor in inquiry as credit and issuers move to lower coupons in both competitive and negotiated deals.

Dealers say increased focus on systemic pennying has decreased its activity, while others aren't so sure.

Rich ratios focus buyers' eyes on a primary market that simply doesn't have enough supply to keep up with demand.

High-yield continues to be sought after as high-grade paper is yielding about 0.70% in 10 years and 1.40% or lower in 30 years and credit spreads continue to tighten in nearly every sector. Ratios are near 20-year record lows.

It is most certainly an issuers' market as rates are low, credit spreads continue to tighten, money pours into municipal bond mutual funds at record levels and a net negative supply of more than $11 billion.

Chicago Board of Education bonds were repriced to lower yields by as much as 37 basis points, showing just how far investors will go for any incremental yield.

Fed chair says it's unlikely there will be "troubling inflation" any time soon, and rates will stay low and asset purchases will continue at current levels. ICI reports another $3.24 billion of inflows as munis follow UST to lower yields.