Secondary bond market

Difficulty tracking securities means a harder time for investors to understand their credit risk during the pandemic.

Refinitiv Lipper reported inflows of net $201 million for the week ending Dec. 2, down from $386 million the week prior.

Until supply increases, year-end demand has munis outperforming. ICI reports another multi-billion week of inflows.

Munis are likely to lag Treasuries in some fashion once year-end empathy settles in mid-month and ratios become a factor.

After volume in November came in around $19 billion, the lowest since 1999, investors look to December.

Michael Chalker, portfolio manager and senior analyst at LM Capital Group, talks with Chip Barnett about the fixed-income markets and the fallout from the COVID-19 pandemic. (16 minutes)

The Investment Company Institute reported municipal bond funds saw $2.675 billion of inflows in the latest reporting week.

Sources said the JFK deal was massively oversubscribed, allowing underwriters to lower yields from 15 to 45 basis points.

Municipals held firm ahead of this week's new issue slate, which features deals from issuers in New York and Texas. Treasuries weakened as stocks rose on positive coronavirus news.

Municipals continue to rally as market participants get ready to head into a quiet holiday week.

Large blocks of New Jersey paper changed hands with yields that pushed spreads below 100 basis points on some maturities for the recently downgraded state.

A supply/demand imbalance allowed New Jersey and Massachusetts to reprice to lower yields while the beleaguered New York MTA will head back to the Fed for liquidity.

The strong demand amid a dearth of new municipal issuance by states and a reach for yield also allowed New Jersey to skip a planned taxable portion and officials announced it would not need to access the Fed's Municipal Liquidity Facility.

Municipals were steady to stronger ahead of $11.5 billion of supply as requests for new municipal bond identifiers surged almost 40% last month.

Municipals firmed Friday, with yields falling by as much as two basis points, as coronavirus threats grow and a flight-to-safety resumes.

Municipal bonds strengthened Thursday as yields fell by as much as four basis points on AAA curves but coronavirus vaccine rally in stocks slowed and UST, munis regained ground.

Light primary easily absorbed while secondary trading showed a steadier market as it closes for Veterans Day. Massachusetts announces $1.4 billion of GOs for next week.

Municipal yields rose as much as five basis points on the long end, but the losses were not as pronounced as UST. Light dealer inventories and scarce secondary trading let munis outperform Treasuries.

As the week drew to a close, municipal bond market participants looked ahead to a smaller-than-usual supply slate dominated by revenue bond deals.

To little surprise, the Federal Reserve left interest rates unchanged. Refinitiv Lipper reported tax-exempt muni bond funds lost about $954 million.