Securitization

Triple-A scales saw yields rise 10 to 13 basis points following a second day of UST losses as muni investors await a robust new-issue calendar.

Munis saw smaller losses, outperforming a UST sell-off after the employment report came in stronger than expected, leading analysts to suggest Federal Reserve rate cuts may come later than anticipated.

The goal behind SOLVE's new product is to turn raw data into data-driven insights through AI, with munis being the first step before expanding to other key asset classes in fixed income, said Eugene Grinberg, co-founder and CEO of SOLVE.

The primary saw strong demand with the Triborough Bridge and Tunnel Authority doubling the size of its deal to $1.6 billion.

Fed Chair Jerome Powell said cuts are likely this year but are not guaranteed. He added that the Fed is looking for more signs that inflation is moderating. "We are prepared to maintain the current target range for the federal funds rate for longer if appropriate."

"Yields are attractive, and there's going to be a lot of demand and there's not going to be a lot of bonds," said Scott Diamond, co-head of the municipal fixed income team at Goldman Sachs.

"The market seems to be coalescing around the view that these historically rich ratios can be sustained through February, but that the market technical becomes far less favorable in March and April," said Birch Creek Capital strategists in a report.

BofA expects muni yields to continue to move up and credit spreads to narrow "in a slow and gentle fashion" in February.

The inflows into muni mutual funds mark a reversal from 2022 and 2023.

LSEG Lipper reported Thursday that investors added $210.6 million to municipal bond mutual funds for the week ending Wednesday — the third consecutive week — after inflows of $898 million the week prior.