Munis continue to richen, but UST yields essentially flat

Munis continued to firm on Wednesday, as equities climbed and Treasury yields barely budged.

Wednesday saw the third consecutive day of falling muni yields, suggesting the market is recovering from last week's selloff. The market is well-positioned for "a strong snapback," according to James Pruskowski, managing director at Hennion & Walsh Asset Management.

"Rates are helping lift munis today after a tough quarter-end, as pent-up demand finally flows through," Pruskowski said in an email. "Sentiment definitely improved today, but talk of Iran ending hostilities requires balancing hope with reality."

The Investment Company Institute Wednesday reported outflows of $218 million for the week ending March 25, following $497 million of inflows the previous week.

Exchange-traded funds saw outflows of $154 million after $2.565 billion of inflows the week prior, per ICI data.

New-issue market
In the primary market Wednesday, Goldman Sachs (GS) priced for the Los Angeles Department of Water and Power (Aa3//AA-/AA/) $400 million of power system revenue bonds, Series 2026A, with 5s of 7/2032 at 3.23%, 5s of 2037 at 3.53%, 5s of 2041 at 3.99%, 5s of 2046 at 4.48%, 5s of 2050 at 4.73%, and 5.25s of 2056 at 4.79%, callable 1/1/2036.

In the competitive market, the Board of Regents of the University of Houston System (Aa2/AA+//) sold $366.055 million of consolidated revenue and refunding bonds, Series 2026A, to BofA Securities, with 5s of 2/2027 at 2.47%, 5s of 2031 at 2.77%, 5s of 2036 at 3.23%, 5s of 2041 at 3.73%, 2s of 2046 at 4.50% and 2s of 2047 at 4.60%, callable 2/15/2035.