Secondary bond market

Lighter supply, at an estimated $7.9 billion, and still-attractive valuations should allow for solid muni performance this week, said J.P. Morgan strategists.

Municipal bond issuance for the week of March 24 is at $7.923 billion, with $6.673 billion of negotiated deals and $1.251 billion of competitive deals on tap.

Separately managed accounts have exploded in the muni market in recent years but high-yield SMAs remain rare.

Most of Thursday's issuance came from competitive deals, the largest being the Dormitory Authority of the State of New York with $2 billion-plus and California with $889 billion.

Wednesday marked the first trading session that saw cuts more than a basis point or two in spots since last week's extended selloff.

"While there has been some reported buying by relative value institutions amid higher ratios from the muni-centric price correction, the market as a whole may not rally this week," said Matt Fabian, a partner at Municipal Market Analytics.

Municipals are little changed to start the week after last week's selloff, which saw muni yields cut up to 20 basis points out long.

March had been expected to be difficult due to a "combination of heavy supply, low redemptions, rate volatility, tax-related selling and now fund outflows," said Barclays strategists Mikhail Foux and Grace Cen.

After digit-double cuts out long Wednesday, muni yields rose an additional two to four basis points, depending on the curve, on Thursday.

"The supply/demand dynamic is a headwind for the muni market this week as supply is expected to be elevated," said Cooper Howard, a fixed income strategist at Charles Schwab.