Primary municipal bond market sees strong demand

After an impressive rally in May, municipal participants have hit a pause button, particularly as U.S. Treasury yields rise, pushing municipal to UST relative value ratios lower. “Instead, it appears the focus has shifted to primary offerings, which are being well received and seeing strong demand at the expense of secondary market flows,” said Greg Saulnier, managing analyst, U.S. Municipal Bonds Refinitiv (TM3/MMD). “Underlying factors look to be favorable, including manageable supply, summer redemptions/coupon payments, and back-to-back weeks of inflows.”