It appears investors were starting to trickle back from vacation this week as secondary volume increased even though the primary market saw one of its lowest new issuance weeks this year. The Municipal closed end market also awoke from its slumber and saw increased volume and liquidity.
The Municipal bond market is starting to see some very positive technical signs going into the back end of summer. This week will once again bring a smaller than average new issue calendar of $3.4B versus a weekly average of $6.3B.
This week will also be the largest week of the year for Municipal bonds that are maturing, being called and dividend reinvestments, equating to approximately $46B.
Additionally, cash flows into Municipals were positive last week for the first time since January 19th.
With the strong cash flow that is expected into the municipal market this week a lower-than-average new issuance calendar and Municipal yields that are relatively cheap to Treasuries, I would expect a solid foundation for another positive week.