Stay updated with breaking news from Association Aa. Get real-time updates on events, politics, business, and more. Visit us for reliable news and exclusive interviews.
The CPI report showed inflation had slowed to 7.1%, giving investors confidence the Federal Open Market Committee will hike rates 50 basis points as expected following Wednesday's much-anticipated meeting.
The December Federal Open Market Committee meeting, combined with the release of inflation data, "will test the good cheer currently prevailing in the bond market," said MSCI Research strategists Andy Sparks, Tamas Hanis and Edina Szirma.
Investors will be greeted Monday with a new-issue calendar estimated at $3.214 billion, the majority of which is a nearly $1.9 billion private activity P3 bond deal from Pennsylvania.
Investors pulled more from municipal bond mutual funds in the latest week, with Refinitiv Lipper reporting $2.038 billion of outflows, up from $1.503 billion of outflows in the previous week.
With massive secondary selling pressure and a larger calendar, credit spreads are likely to continue to widen.