Insights of a Municipal Bond Trader

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A LOOK AHEAD – WEEK OF 2.4.19

The light new issue calendar in conjunction with solid fund inflows provided an opportunity for long end traders to sell into some strength and get down in position. The below ratio chart provides good evidence of municipal outperformance on the long end with ratios on the week dropping 1.6%. Coming into this week, we believe that with the forward calendar growing and recent yields having moved lower, the beginning of February may be a short period of weaker performance in municipals. We will however, participate selectively in next week’s new issue negotiated calendar of ~$5.7bn where we see value, again primarily in the 15- to 20-year maturity range.

FUND FLOWS

Lipper reported combined weekly and monthly inflows of $1.1bn for the period ending January 30th, increasing YTD inflows to $4.0bn. High Yield funds recorded $308mn of inflows, Intermediate funds saw $463mn of inflows, Long-Term funds saw $565mn of inflows, and Municipal ETF’s registered $239mn of outflows.

SPOTLIGHT

The below deal should set the tone for the high yield muni market as it has been some time since a sizeable BBB healthcare deal has come to the market. We believe this may have an impact on the secondary pricing of yield offerings from clients and dealers. We will certainly be watching it closely.

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Insights of a Municipal Bond Trader 02.04.19

 

 

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