This week's surge in issuance, which tops $14 billion, is "likely going to keep a lid on any enthusiasm," Birch Creek strategists said in a weekly report.
Largest new-issue muni bond week since 2017 ahead bondbuyer.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from bondbuyer.com Daily Mail and Mail on Sunday newspapers.
"June started out fairly strong for the municipal market as the relative cheapness attracted investors looking for an opening to start buying bonds at higher yields," said Roberto Roffo, managing director and portfolio manager at SWBC Investment Company.
Last week, munis underperformed the Treasury market "across the curve through Thursday with yields lower just 13bps," according to Birch Creek strategists. However, they said Friday's rally "in the front end helped pull shorter maturity munis ahead."