Munis and U.S. Treasuries grow cheaper

Munis cheapened slightly on the front of the curve on Thursday, as U.S. Treasury saw continued losses and equities ended lower.

It was another "topsy-turvy day" for munis, said Kim Olsan, senior fixed income portfolio manager at NewSquare Capital. Munis have been weaker on the front end for a few days, leading to a slight inversion of the curve, starting around the 2028 maturities, Olsan said.

"Some of the issues that sold [Wednesday] and today, it looks to be in that 2028 to 2030, 2034 area, where you can get a 2.50% yield, but if you can go a little further and get a 3.00%, that seems to be where inquiry is pushing, and so some of the balances are clogging up in that range," Olsan said. "It's a tough range right now, just with where real yields are. And ratios aren't super cheap. So, [it's] not surprising to see some of the deals stall a little bit there."

New-issue market
In the primary market Thursday, Morgan Stanley (MS) priced for the University of Massachusetts Building Authority (Aa2/AA-/AA/) $564.005 million of revenue refunding bonds. The first tranche, $252.415 million Senior Series 2026-1, saw 5s of 11/2026 at 2.50%, 5s of 2031 at 2.72%, 5s of 2036 at 3.08%, 5s of 2041 at 3.49%, and 5s of 2044 at 3.80%, callable 11/2036.

The second tranche, $311.59 million Senior Series 2026-2, saw 5s of 11/2026 at 2.50%, 5s of 2031 at 2.72%, 5s of 2036 at 3.08% and 5s of 2040 at 3.37%, callable 11/2036.

In the competitive market, Round Rock, Texas (/AAA//), sold to J.P. Morgan $100 million of general obligation bonds, with 5s of 8/2027 at 2.52%, 5s of 2031 at 2.67%, 5s of 2036 at 3.14%, 5s of 2041 at 3.54%, 4.125s of 2045 at par and 4.5s of 2051 at par, callable 8/2035.

Fund flows
Investors added $1.02 billion into municipal bond mutual funds in the week ended Wednesday, following $427.5 million of inflows the prior week, according to LSEG Lipper data.

High-yield funds saw inflows of $111.1 million compared to inflows of $74.8 million the previous week.

Tax-exempt municipal money market funds saw outflows of $1.187 billion for the week ending April 20, bringing total assets to $141.805 billion, according to the Money Fund Report, a weekly publication of EPFR.

The average seven-day simple yield for all tax-free and municipal money-market funds was 2.87%.

Taxable money-fund assets saw $27.302 billion pulled, bringing the total to $7.475 trillion.

The average seven-day simple yield was 3.35%.

The SIFMA Swap Index was at 3.62% on Wednesday compared to the previous week's 3.65%.