Munis and USTs grow richer

Munis and U.S. Treasuries richened Thursday. Equities closed higher.

Muni yields fell by up to four basis points, depending on the scale. UST yields fell by up to four basis points, with short-term USTs seeing the biggest gains .

The muni market has displayed a "go-it-alone theme" this week, wrote Kim Olsan, senior fixed income portfolio manager for NewSquare Capital. The stalled peace talks in Iran caused a reaction in USTs and equities on Wednesday, but munis stayed firm.

"On a broad level, sentiment appears to reflect long-range optimism, though with some expected bumps along the way," Olsan wrote. "In a pure supply-demand scenario, weekly municipal issuance averaging $11.5 billion this year (vs. the $9.1 billion average over the last five years) could arguably force higher yields and/or wider concessions. Instead, scheduled redemptions are being reinforced by substantial fund inflows."

Fund flows
Investors added $1.416 billion into municipal bond mutual funds in the week ended Wednesday, following $2.325 billion of inflows the prior week, according to LSEG Lipper data. This is the fifth week in a row that inflows topped $1 billion.

High-yield funds saw inflows of $425.6 million compared to inflows of $311.5 million the previous week.

Tax-exempt municipal money market funds saw outflows of $1.998 billion for the week ending June 1, bringing total assets to $147.329 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 1.54%.

Taxable money-fund assets saw $89.973 billion added, bringing the total to $7.723 trillion.

The average seven-day simple yield was 3.34%.

The SIFMA Swap Index was at 2.14% on Wednesday compared to the previous week's 1.57%.

New-issue market
In the primary market Thursday, Goldman Sachs (GS) priced for the California Community Choice Financing Authority (Aa2///) $1.197 billion of clean energy project green revenue bonds, Series 2026E, with 5s of 7/2029 at 3.15%, 5s of 2031 at 3.40% and 5s of 2035 at 3.78%, callable 4/2035..

BofA Securities priced for Charlotte, North Carolina, (Aaa/AAA//), $561.695 million of water and sewer system revenue bonds, with 5s of 7/2027 at 2.36%, 5s of 2031 at 2.62%, 5s of 2036 at 2.99%, 4s of 2041 at 3.70%, 5s of 2041 at 3.42%, 5s of 2046 at 3.88%, 5s of 2051 at 4.14% and 5s of 2056 at 4.33%, callable 7/2036.