Taxable bonds

Investors put nearly $2 billion into municipal bond mutual funds for the most recent week with high-yield reversing a downward course to hit $1.2 billion following just $1 million a week prior.

A lighter, $5 billion calendar, heavy on healthcare, kicks off November. Most participants agree volatility in U.S. Treasuries will be a leading factor for municipal market performance. Uncertainty in Washington also isn't helping the asset class.

October has, on average, been the heaviest new-issue month of the year. Analysts said the lower volume, particularly taxables, was led by many issuers sitting on the sidelines, waiting for a potential package from Washington, D.C.

Seventy-seven percent of respondents to a Bond Buyer survey said there should be universal ESG standards and just over half said ESG is “critical” or “very important." Consensus on how to and who should create such a language is less clear.

The lion's share of the deal is taxable, with a $20 million tax-exempt new money series; proceeds from the taxables will refund outstanding debt.

The increase in yields and spread widening across municipal sectors has given some pause to high-yield investors after months of stagnation.

Municipals took a breather Monday, largely ignoring stock market volatility and softer U.S. Treasuries, ahead of a solid $9 billion new-issue week.

September issuance was down more than 32% from the same month in 2020; total issuance so far this year is at $346.48 billion, down 2.4% compared to last year.

The high-grade muni scales saw cuts of up to four basis points in a continued selloff Monday as the market faces a robust slate of new issues.

Month-to-date returns for municipals are in the red with the Bloomberg Fixed Income Indices municipal index returning -0.12%, high-yield at -0.15% and taxables at -0.32%.