Excerpt from The Bond Buyer:
Muni market unperturbed amid mob violence in U.S. Capitol
– Jan. 06, 2021
Solid technical factors that drove performance in the municipal market in 2020 are continuing to keep the tax-exempt market strong in the first of 2021, according to municipal sources.
With supply still tight and the Treasury market down, municipal activity focused on decent trading volume on Wednesday, according to a New York trader.
“There are sellers and some going away trades,” he said. “Municipal yields are down a few basis points but given the severity of the Treasury move, munis are obviously outperforming and it’s a lot to do with supply and a lot to do with the uncertainty with the tax outlook going forward,” the trader added.
He described the market as active and orderly, displaying “resilience,” with some investors remaining on the sidelines speculating as they await more supply later in the week and the conclusion of the Georgia election.
“Despite Treasuries, the market is putting in a pretty decent performance today,” the trader explained, predicting that municipals might be down two to three basis points on the day, as municipal to Treasury ratios remain at all-time highs hovering at 76% in 10 years.
“It’s still very quiet,” on both the investor and issuer sides of the market, John Mousseau, president and director of fixed income at Cumberland Advisors said.
A smaller, $30 million Greenwich, Ct. general obligation bond deal priced slightly through the Refinitiv/Municipal Market Data benchmark scale on Tuesday, which Mousseau said demonstrates the strength of the market.
The deal’s five-year bonds in 2026 with a 5% coupon were priced to yield 0.19%, which compared to the triple-A benchmark scale which yielded 0.21% on Tuesday.
He said there should be much more market clarity later in the week with the announcement of the results of the Georgia elections.
“Folks are waiting on Senate races and electoral college shenanigans — if any,” he explained.
Others agreed, saying municipals appear to have a strong entry into the first quarter.
Read the full story at The Bond Buyer’s site: https://www.bondbuyer.com/news/munis-outperform-ust-sell-off-while-ici-reports-3-5b-inflows
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