Mutual funds
Another strong session for munis; FOMC minutes signal caution
The large drop in yields since the end of October can be reflected in sentiment that investors expect a potentially dovish Fed next year, and that a soft landing narrative gives them “permission to finally purchase the bonds they’ve been admiring,” said MMA’s Matt Fabian.
Read MoreMuni yields rise in sympathy with USTs ahead of substantial new-issue slate
“The combination of higher yields and this week’s heavier new-issue calendar will attract attention from income-focused individual investors as well as from institutional investors who are underweight munis,” said CreditSights strategists Pat Luby and Sam Berzok.
Read MoreMunis sell off after Fed indicates rates will be higher for longer
The general bias toward muni rates is that they would be a bit higher with technicals “being a little less supportive than they were in August, plus what we heard with from the Fed ‘higher for longer,’ and potentially another hike,” said Jeff MacDonald, head of Fixed Income Strategies at Fiduciary Trust International.
Read MoreMuted reaction to FOMC, Powell as munis contemplate future hikes
As was expected, the FOMC held rates in a range between 5.25% and 5.50%, but the dot plot in the Summary of Economic Projections showed 12 of 19 members expect another 25-basis-point rate hike this year.
Read MoreMunis sell off, outflows near $1B
Municipal bond mutual fund saw outflows return with Refinitiv Lipper reporting investors pulling $989.852 billion from funds for the week ending Wednesday, led by ETFs and long-end funds.
Read MoreMunis weaker but outperform UST selloff after GDP report
Municipal bond mutual fund saw inflows with Refinitiv Lipper on Thursday reporting investors added $552.219 million to funds for the week ending Wednesday following $1.040 billion of outflows the previous week.
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