The municipal market again saw yields fall across the curve, dropping as much as eight basis points on the short end Monday and up to 15 on the long end.
The market is anticipating the Federal Reserve to step in as a buyer of last resort for munis, though how much, which credits, and what durations are still cloudy.
The Fed has already begun to buy variable rate demand obligations and has helped the short end of the market recover after massive mid-March losses of at least 2%.
“The overall dynamic of the market has been helped by the opening of the Federal Reserve’s Money Market Mutual Fund Liquidity Facility, which opened on March 23 and as of Wednesday, April 1, had lent out $52.67 billion,” said Patrick Luby, senior municipal strategist at CreditSights.
(Read more: The Bond Buyer)
