Some stability in the municipal market is being marked by less outflows, Federal Reserve and government intervention, and slightly improving primary market volume. The market is not yet on solid ground amid the COVID-19 crisis, though, according to market participants, and caution is warranted.
The coronavirus has shaken the foundation of the municipal market and they said they are attempting to adjust to the sustained volatility.
Some said recent data is not a chief indicator of market tone and noted it is still too early to point to the recent decrease in outflows—relative to the double-digit billions the market experienced in March, for instance—as proof of overall calm. Wednesday’s ICI reports of $2.9 billion of outflows out of municipal bond mutual funds pales in comparison to the $20-plus-billion experienced in March.
In addition, the moves by the Federal Reserve to shore up the short-end of the municipal market through its Municipal Liquidity Facility have received mixed reviews. <
(Read more: The Bond Buyer)
