Securitization

Investors added $238.5 million to municipal bond mutual funds in the week ending Wednesday, following $1.124 billion of inflows the prior week, according to LSEG Lipper data.

Portfolio managers seem more sanguine about threats to the tax exemption from Congress.

Inflation is front and center this week, with the consumer price index report released on Wednesday and the producer price index on Thursday.

Municipals were cut up to four basis points, depending on the scale, while UST yields rose up to four basis points out long.

BlackRock's move comes as money continues to flow out of muni mutual funds into ETFs and SMAs.

Munis continue to outpace USTs as ratios on the front end continue to richen relative to USTs, Jason Wong said.

Muni yields were bumped one to eight basis points, depending on the scale, while UST yields fell three to 10 basis points, with the greatest gains out long.

Tax exemption concerns — though an elimination is unlikely — and the loss of federal stimulus will "most assuredly pull forward delayed issuance, with the first half of 2025 volume to exceed second half volume," said James Welch, a municipal portfolio manager at Principal Asset Management.

To close out the day, USTs remained mixed, with yields rising on the short end and falling out long, while munis were changed up to a basis point, depending on the curve.

Investors added $741.7 million to municipal bond mutual funds in the week ending Wednesday, following $2.078 billion of inflows the prior week, according to LSEG Lipper data.