Securitization

A combination of a "stronger-than-expected economy, higher Treasury rates, robust supply, and rich valuations resulting in choppy markets" have made the trading environment in H124 "quite difficult," according to Barclays.

"Folloing recent yield moves, a generic muni index is now down 1% on the month with no real sub-sector showing much deviation from that result," said Kim Olsan, senior vice president of trading at FHN Financial.

The finance team is "marketing slices of risk" to raise money to refinance its debt, investors said.

Despite higher yields, muni to UST ratios remain rich. Ratios look "progressively richer" moving into the five- to 10-year part on the curve, with the 10-year spot "still far more attractive in taxables versus tax-exempts," J.P. Morgan said.

"April has been one of the worst-performing months over the past five years, which we believe warrants continued caution," BlackRock strategists said.

Barclays' Mikhail Foux talks shifting demand, BABs refundings, election effects and what it means for the asset class in a volatile market.

April continues to be "harsh" for munis as the asset class has given up roughly 72 basis points in the first two weeks of the month, said Jason Wong, vice president of municipals at AmeriVet Securities.

In a week marked by inflation and jobs data that made clearer the Federal Reserve will not be cutting rates nearly as much or as many times as some had expected even a week ago, Friday's headlines further complicated the landscape for investors and munis have had little choice but to go along for the ride.

BABs can offer value for investors who can stomach the call risk, said municipal strategists.

Municipal bond mutual funds saw the seventh consecutive week of inflows and the 14th week of inflows for high-yield funds.