Securitization

"We're going to have some weak days, we're going to have some stronger days, maybe they wash out against each other," said Kim Olsan, senior fixed income portfolio manager at NewSquare Capital.

Ajay Thomas, head of public finance at FHN Financial, said the market has been "totally driven" by headlines out of the Middle East this week.

As the war in Iran drags on, fears of inflation and higher oil prices are driving up yields, according to Schwab's Cooper Howard.

Munis cheapened ahead of what may be another volatile week, according to AllianceBernstein's Daryl Clements.

Rate hikes appear to be more realistic following this week's hotter-than-expected consumer price index and producer price index data, said Kevin McGuigan, director at Municipal Market Analytics.

The complicated environment has created different outcomes for different parts of the muni market, Hennion & Walsh's James Pruskowski said.

Although muni valuations became "less compelling" in April from March's highs, Pat Haskell wrote for BlackRock, technical conditions "are likely to provide a degree of support in the months ahead."

Inflation and heavy supply have finally worn on muni yields after a week of stability.

The muni market continued to shrug off volatility in Treasuries, but NewSquare Capital's Kim Olsan said a reaction is building up.

"I don't mind owning a railroad for $2.4 billion," said Assured CEO Dominic Frederico.

Munis should do "relatively well" this month, as investors will "focus on heavy summer redemptions; tax-exempt supply should remain healthy but is unlikely to overwhelm," said Barclays strategists.

"The rates market has started to turn from the upper end of the trading range this week," Barclays strategists wrote, but with the war with Iran still driving the market, nothing is certain.

New research from The Bond Buyer finds the federal policy environment once again threatens the tax-exempt status for municipal bonds.

Munis and U.S. Treasuries have been more reactive to geopolitical news than to economic data that traditionally moves the market, according to MMA's Kevin McGuigan.

The muni new-issue market got a breather after a heavy supply day on Tuesday, according to Franklin Templeton's Jennifer Johnston.

Senior bonds most recently traded for 30 cents on the dollar.

The muni market digested Tuesday's heavy supply in the way analysts expected, H.J. Sims analyst Tim Iltz said.

SWBC's Chris Brigati said he doesn't expect the geopolitical tensions to cause similar losses to muni yields unless oil prices or Treasury yields move significantly higher.

With continued geopolitical tensions and surging oil prices, things could change on a dime, said Sweta Singh, founding partner and portfolio manager at City Different Investments.

Munis were quiet on Friday after an eventful April.