Secondary bond market

While April was a challenging month for muni performance, this summer will be a more supportive environment, said Mark Paris, chief investment officer and head of municipals at Invesco.

The muni market is recovering from tariff turmoil, and is more resilient than the day-to-day volatility suggests, Jamie Doffermyre of Truist Securities said.

Even with Monday's U.S.-China tariff truce and Tuesday's inflation print, the market has felt better over the past several weeks, said Jamie Iselin, managing director and head of municipal fixed income at Neuberger Berman.

Munis yields followed UST yields higher Monday, rising one to four basis points, depending on the scale, but the asset class outperformed USTs.

"In our view, the worst for munis is behind us, at least for now; tax-exempts might continue to outperform, but only to a degree as technicals will remain somewhat challenging," Barclays strategists said.

The recent firmness in the market has been "much appreciated," said Shannon Rinehart, senior portfolio manager of municipal debt at Columbia Threadneedle Investments.

The bonds have not reacted to the most recent negative ratings actions, although one buysider said that may soon change.

Muni yields remain attractive, said Tom Kozlik, managing director, head of public policy and municipal strategy at HilltopSecurities.

Most of the Maryland Proton Treatment Center's debt hasn't traded hands for years.

Focus was on the primary market last week, with Birch Creek reporting that one dealer estimated that 90% of the focus earlier in the week was on new issues.

"For munis, a strong jobs report should reverse recent credit spread widening, while a weak jobs report should keep credit spreads around current levels," said BofA strategists.

Part of the problem is lack of reimbursement from insurance companies, said the owner of one proton center.

Compensation played a role in the departures, sources said.

The well-known muni strategist said he's pursuing "more market-related opportunities."

Some of the issuance stems from project finance largely "drying up" because of where rates are, said Jennifer Johnston, senior vice president and director of research, municipal bonds, for Franklin Templeton Fixed Income. 

The market has seen seven consecutive weeks of outflows. "This is not surprising given that retail investors tend to follow performance," said Daryl Clements of AllianceBernstein.

"Easing tariffs, a slowing economy and an improved supply/demand outlook for munis in May and onward should drive muni market pricing going forward," BofA strategists said.

Investors pulled $397.4 million from municipal bond mutual funds in the week ended Wednesday, following $1.258 billion of outflows the prior week.

The escalating dispute between the prestigious issuer and the White House is spooking some bond holders and creating opportunities for others.

The market is still in a negative technical period, said Chris Eustance, a portfolio manager at Morgan Stanley Investment Management.