Munis steady but yields could rise under heavy calendar
Munis were little changed on Monday, as U.S. Treasuries cheapened and equities ended mixed.
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Muni yields weakened by up to two basis points, depending on the scale, with losses at the long end. UST yields cheapened by six to seven basis points.
The weakness in USTs is likely “carryover from last week,” said Ajay Thomas, head of public finance at FHN Financial, when “concerns about [artificial intelligence] research and development and corporate earnings started seeping into the market [and] really affected Treasuries.”
Recently, munis have been following USTs for the most part, but Thomas expects munis to underperform USTs this week due to the large new-issue calendar.
There aren’t many outside factors set up to sway the markets this week, Thomas said. The Federal Reserve is in a blackout period ahead of its October meeting, so investors shouldn’t expect any new economic data.
