Securitization

"Buyer interest comes as forward supply is projected around $20 billion (the high water mark over the last year) while offsetting calls and maturities sit about $2 billion lower, creating a net supply surplus," said Kim Olsan, a senior fixed income portfolio manager at NewSquare Capital.

The muni market enters the last quarter of 2024 in "excellent shape," said GW&K Investment Management partners John Fox, Brian Moreland, Kara South and Martin Tourigny.

Supply ramps up this week to an estimated $13.361 billion, with several billion-dollar pricings on tap.

Municipal triple-A yield curves played catch up to USTs Friday to close out a week of more mixed economic data that has economists constantly reevaluating their Federal Reserve policy expectations with little consensus.

Municipal bond insurers wrapped $28.921 billion in the first three quarters 2024, a 26.8% increase from the $22.814 billion insured in the first three quarters of 2023, according to LSEG data.

Analysts remain divided about what the stronger-than-expected consumer price index will mean for Federal Reserve policymakers since the Fed appears to be concentrating on the labor market.

Data from the Municipal Securities Rulemaking Board indicates that trade volume may stay high after a consistent third quarter.

With munis establishing "directional footing" in the fourth quarter of this year, the technical backdrop is still the market driver for 2024, said Jeff Lipton, a research analyst and market strategist.

Supply is slightly lower this week at nearly $10 billion but not by much, with the pace of supply suggesting $500 billion of issuance for the year could still happen, said Tripp Kaiser, a managing director at Municipal Market Analytics, Inc.

Muni yields were cut up two to five basis points, depending on the curve, while UST yields rose five to seven basis points, pushing the 10-year UST yields above 4%.