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Muni Supply Set for Second Weekly Drop as Yields Near 1-Year Low

Issuance in the $3.7 trillion municipal-bond market is set to slow next week, helping keep benchmark yields close to one-year lows.

States and cities plan to sell about $6.1 billion of bonds next week, down from $7 billion this week, data compiled by Bloomberg show. It’s the slowest spate of issuance since May.

Yields on benchmark 10-year munis were little changed this week at about 2.41 percent. The interest rate set a one-year low of 2.24 percent on June 2.

The supply calendar marks a slowdown from a busy first half of June, which included a tally of $9.6 billion in the week through June 13, the most since March.

“We have moved through this bubble, which we weren’t used to,” said Fred Yosca, head of fixed-income trading at BNY Mellon Capital Markets LLC in New York. “It should be a positive for munis.”

The drop in scheduled sales coincides with ebbing demand as investors added $148 million to muni mutual funds this past week, the least since April, Lipper US Fund Flows data show.

To contact the reporter on this story: Elizabeth Campbell in New York at ecampbell14@bloomberg.net

To contact the editors responsible for this story: Stephen Merelman at smerelman@bloomberg.net Mark Tannenbaum, Alan Goldstein

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