Secondary bond market

"The main question for investors recently has been: will we see bank selling of municipals that exerts pressure on the market, and what kind of market effects could occur," Barclays strategists said.

"The muni market is no different than others, where fear and greed drive the trends," said Peter Delahunt, StoneX's managing director.

Triple-A benchmarks have fallen five to 10 basis points, depending on the scale.

Investors will be greeted Monday with a new-issue calendar estimated at $6.041 billion.

Outflows continued as Refinitiv Lipper reported $307.815 million was pulled from municipal bond mutual funds in the week that ended Wednesday after $905.030 million of outflows the week prior.

The two-year UST is now a full point above the 10-year UST, something that hasn't happened since 1981.

Ellis Phifer, managing director and senior strategist in the fixed income research department at Raymond James, talks with Chip Barnett about the state of the bond markets. (Taped Feb. 16; 15 minutes)

Federal Reserve Chair Jerome Powell will testify beore Congress twice this week and Friday brings the latest employment report.

The "week's substantial primary market calendar of $10-plus billion will be a big test for where market demand stands," said Tom Kozlik, head of public policy and municipal strategy at HilltopSecurities Inc.

The 10- and 30-year Treasuries haven't reached these levels since November.

Outflows returned, with the Investment Company Institute reporting investors pulled $1.148 billion from mutual funds in the week ending Feb. 22, after $931 million of inflows the previous week.

The bond markets are witnessing a rare situation that could hinder spending on infrastructure projects around the country, said Amanda Hindlian, president of fixed income and data services at ICE.

The availability of higher yields has brought some investors into the market — even though volume in the primary and secondary markets are on the thin side and the municipal market is a bit of a mixed bag right now.

Investors will be greeted Monday with a new-issue calendar estimated at $4.098 billion.

An improving tone was apparent in the municipal market midweek — after a topsy-turvy ride last week when the market saw a close to 50-basis point adjustment to the front end of the triple-A municipal yield curve.

Earlier in the pandemic, bond values showed a greater divergence among local government issuers tracked, but that has reverted to pre-pandemic levels, although work-from-home and other uncertainties still take a toll.

Inflows continued with the Investment Company Institute reporting investors added $931 million to mutual funds in the week ending Feb. 15, after $2.194 billion of inflows the previous week.

"The close to 50 bp adjustment to the front end of the AAA municipal curve, taken at face value, appears to be a huge step toward pricing normalization for tax-exempts," said Eric Kazatsky, head of municipal strategy at Bloomberg Intelligence.

Investors will be greeted Monday with a new-issue calendar estimated at $3.603 billion.

Refinitiv Lipper reported $68.054 million was pulled from municipal bond mutual funds in the week that ended Wednesday after $775.006 million of inflows the week prior.