High-yielding mutual funds and a $770 million bond deal from the Triborough Bridge and Tunnel Authority took center stage while mutual fund inflows returned. U.S. Treasuries fell and stocks closed in the black.
According to Refinitiv MMD’s 3pm reading, the 3-year Municipality to UST ratio was 60%, 5-year 67%, 10-year 72%, and 30-year 100%. ICE Data Services had 3 at 61%, 5 at 67%, 10 at 76%, and 30 at 101% for the 4pm read.
Refinitiv Lipper reported that $46.912 million was added to municipal bond mutual funds in the week through Wednesday after a $1.394 billion outflow the previous week.
High yield bonds led with inflows of $552.127 million after outflows of $590.46 million last week. Exchange traded funds, on the other hand, recorded inflows of $952.134 million after inflows of $745.97 million the previous week.
“Municipalities are in a play-or-prayer mode, either committing at current levels or after yields rise by more than 60 basis points,” said Kim Olsan, senior vice president of municipal bond trading at FHN Financial. , or wait for some pullback.”
“Hope for a meaningful yield decline may be weeks away,” if the fundamentals are any indication, Mr. Orsan said.
“Futures supply remains at a near-neutral face value of $10 billion, a level typically inadequate to meet new commitments and rollover needs.” Based on consistent and sustained demand, the ratio is in the low 50% range,” she said.
She said sellers “had more than $10 billion in inventories at the end of November, up about 10% month-on-month, making dealers more willing to increase their holdings.”
The bid list “shows a roll-off of vintage low-coupon bonds and seasonal calls, with a concentration on blocks under $5 million aggregated by Bloomberg’s bidding system,” Orsan said.
“High-grade bonds with a 20-year maturity and a 10-year call option that were issued between 2015 and 2018 had an average yield of 2.69%, according to MMD data,” she said.
The current 20-year5 is trading at around 3.25%, leading to the theme of tax losses, she noted. Similarly, “From 2020 to 2021 she has been dominated by long-term 2s and 3s in new issuance, but has lost all or more of her coupon this year, and another tax loss transaction It’s happening,” she said.
Broadly speaking, she said, “the calendar is giving sellers a win-win, as is the constructive outlook for gradual rate hikes in the coming months.” As a result, the rest of the year’s issues can be expected to have a receptive audience, she said.
The tepid issuance trend seen in November will continue into December, said Tom Kozlik, head of local government research and analysis at Hilltop Securities. His 30-day visible supply of Bond Buyer is his $9.42 billion.
“If we get something between $10 billion and $20 billion this month, we’ll be lucky,” he said, noting that December is usually a low issuance month, but this year it’s “one of the lowest December will become one,” he said. long time since I last saw you. ”
Kozlik expects this trend to continue next year as weaker economic growth, rising interest rates and budget easing from past federal aid will leave issuers on the sidelines. said.
“In my opinion, there isn’t much going on with issuance,” he said. Hilltop Securities predicts he will have $350 billion in total issuance in 2023.
On the buy side, he believes there is ready money out there. Investors have added money to mutual funds both this week and in the past few weeks, and Kozlik said more money could come in.
On the first Thursday, Barclays Capital priced the Los Angeles Water and Power Authority (Aa2/AA+/AA/). $399.78 million water system revenue bond, 2022 Series D, 5 cents in July 2023 was 2.26%, 5 cents in 2027. 2.28%, 5 seconds in 2032 is 2.36%, 5 seconds in 2037 is 3.10%, 5 seconds in 2042 is 3.48%, 5 seconds in 2047 is 3.67%, 5 seconds in 2052 is 3.76%, 2032 Callable on July 1, 2019.
In a highly competitive market, New York’s Triborough Bridge and Tunnel Authority sold a total of $770 million in MTA Payroll Transfer Tax Guaranteed Bond Forecast Notes, Series 2022B.
The agency sold $370 million to JP Morgan Securities for a 2.72% as of December 5, 2024.
The agency also sold $100 million to Wells Fargo on December 5, 2024 for 2.69%.
In addition, The Authority sold $50 million to Citigroup Global Markets, 5 December 2024 at 2.69%, and 5 December 2024 at 2.72% to Citigroup Global Markets for another $50 million. did.
The Authority sold $50 million to Goldman Sachs on December 5, 2024 at 2.72%, and another $50 million to Goldman Sachs on December 5, 2024 at 2.68%.
The agency also sold $50 million to Jefferies for 2.70% as of December 5, 2024.
The agency sold $50 million to Morgan Stanley, December 5, 2024 for 2.68%.
The Cherry Hill Township School Board of New Jersey (Aa2///) has sold its $300 million School Bond Series 2022 to JP Morgan Securities. 3.30%, 4s in 2037 is 3.68%, 4s in 2042 is 4.15%, callable on 01-Aug-2029.
secondary transaction
2023 California 5s at 2.33% vs. 2.28% on Tuesday. North Carolina Build NC rev 5s of 2024 is between 2.43% and 2.42%.
2.47% of Connecticut 5 in 2025. 2025 Maryland 5s at 2.43%. Prince George County, MD, May 2025 2.44%.
California 5 in 2031 is 2.56%. New Mexico’s retirement tax rev 5 for 2031 is 2.58%. Mecklenburg County, Maryland, 2.66% vs. 2.72% on Monday 5th, 2034. 2.97% of New York City 5 in 2034.
2044 New York City TFA 5s at 4.02%-3.95% vs 3.86%-3.84% on Wednesday. 4.01% of New York UDC PIT 5 in 2050. New York City will water 4.12% in 5 seconds in 2052.
AAA scale
Refinitiv MMD’s size remained unchanged at 2.39% over 1 year and 2.41% over 2 years. 5 years at 2.47%, 10 years at 2.53% and 30 years at 3.46%.
The ICE AAA yield curve has been cut at the front end of the curve. 2.41% (+2) in 2023 and 2.42% (+1) in 2024. 2.58% (inch) and the 30-year yield was 3.47% (inch) at 4pm.
The IHS Markit municipal curve is unchanged. In 2023 he is 2.37% (inch) and in 2024 he is 2.41% (inch). – The annualized yield was 3.44% (onches) at the 4pm reading.
Bloomberg’s BVAL is little changed. 3.44% (onch) at 4pm
Treasuries were off.
2Y UST Yields 4.318% (+8), 3Y 4.058% (+8), 5Y 3.713% (+8), 7Y 3.632% (+9), 10Y yielded 3.490% (+7), the 20-Year Bond yielded 3.694% (+2), and the 30-Year Bond closed at 3.439% (+1).
Investment trust details
Refinitiv Lipper reported an inflow of $46.912 million for the week to Wednesday, following a $1.394 billion outflow the previous week.
Listed Municipal Funds reported inflows of $952.134 million, following inflows of $745.97 million the previous week. Following a $2.14 billion outflow the previous week, the former ETF Municipal Fund recorded his $952.21 million outflow.
Long-term municipal bond funds saw inflows of $448.245 million in the most recent week, after outflows of $1.112 billion in the previous week. The medium-term fund had an outflow of $228.166 million after a $247.709 million outflow the previous week.
The National Fund had an inflow of $226.343 million after an outflow of $1.086 billion last week. Meanwhile, high-yield municipal funds saw $552.127 million inflows after he outflowed $590.46 million last week.
