Treasury bonds

It was inevitable that muni yields would need to rise somewhat as the UST 10-year broke above 1%, however participants said the supply/demand imbalance will keep munis from rising as quickly as Treasuries. More than $1 billion inflows reported.

Dominick D'Eramo, head of fixed income at Wilmington Trust Investment Advisors, talks with Chip Barnett about how the municipal bond market did in 2020 and what may be on tap for munis in the new year. (12 minutes)

ICI reported another $2.3 billion of inflows, new deals continue the march to lower yields and benchmarks rose a basis point seven years and out for the first time since the beginning of December.

The state of Illinois sold $2 billion of three-year notes to the Federal Reserve's Municipal Liquidity Facility at 3.42%.

Even with COVID-19-related shutdowns — a New York City lockdown may be imminent — issuers are pricing bonds into an extremely low-rate environment.

Strong technicals, low supply, yield-seekers keep munis outperforming.

The primary's diversity of credits and size relative to November has grown, but it is just not enough to push yields higher as redemptions flood the market. Some analysts still say a mild correction at least is due.

Refinitiv Lipper reported inflows of net $201 million for the week ending Dec. 2, down from $386 million the week prior.

Until supply increases, year-end demand has munis outperforming. ICI reports another multi-billion week of inflows.

Munis are likely to lag Treasuries in some fashion once year-end empathy settles in mid-month and ratios become a factor.

The U.S. Treasury expanded its plans for the issuance of longer-term debt in coming months, after depending mainly on shorter-dated bills to fund the federal government’s record spending surge to address the COVID-19 crisis.

The rating agency affirmed the U.S. at AAA but said the outlook cut reflects ongoing deterioration in U.S. public finances.

The Financial Stability Board issued a statement April 2 affirming that it is sticking with plans to transition away from Libor by the end of 2021.

The Federal Reserve has been proactive and the secondary market could be next up for assistance.

The primary market remained mostly on the sidelines with issuers slow to jump back into coronavirus-driven volatility while also awaiting Fed engagement.

Rep. Peter DeFazio said gas tax revenue could finance $500 billion in Treasury bonds.

Tradeweb ICE U.S. Treasury Closing Prices is designed to represent the daily market mid-price for Treasury securities.

MarketAxess Holdings will buy LiquidityEdge for $150 million.

The U.S. Treasury Department announced plans to maintain record debt sales.

Treasury Secretary Steven Mnuchin warned that the U.S. government will face a default in “late summer” unless Congress increases the debt ceiling.