Secondary bond market

The NFMA has floated best disclosure practices for public power agencies that ask for more data on climate and resiliency goals.

With investors now anticipating Wednesday's expected rate cut may be the last one for a while, "an overall bullish paradigm has been seriously weakened," noted Matt Fabian, a partner at Municipal Market Analytics, Inc.

As investors start shutting down for the year, there may be some mixed sessions ahead "especially for any accounts that find themselves as forced sellers," Birch Creek Capital said.

Supply falls ahead of the final Federal Open Market Committee meeting of 2024 and the holidays but issuance still breaks records. The lighter calendar should provide support for the secondary market in the final weeks of the year.

Muni mutual funds saw outflows after 23 weeks of inflows as LSEG Lipper reported investors pulled $316.2 million for the week ending Dec. 11. High-yield municipal bond funds, though, saw inflows of $192.3 million.

Municipal investors are more focused on the final new-issues coming down the pike and repositioning books as 2024 heads to a close. ICI reported another week of inflows into municipal bond mutual funds.

"With strong demand, rate cuts and favorable technicals, the muni market — outside of an unexpected shock — is set up to perform well over the next couple of months," said Daryl Clements, a municipal portfolio manager at AllianceBernstein.

Munis are in the black so far this month, with the Bloomberg Municipal Index at +0.33% in December and +2.88% year-to-date, the high-yield index is at +0.27% in December and returning 8.41% in 2024, while taxable munis are returning 0.43% so far this month and 4.58% in 2024.

Investors will be greeted with a diverse new-issue slate the week of Dec. 9, led by bellwether names. If all the deals price, 2024's total should break 2020's record by the end of the week. Despite rich valuations, demand has remained strong as the year winds down.

High-yield municipal bond funds saw inflows of $534.1 million compared to $300.6 million compared the previous week, per LSEG Lipper data.