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After underperforming USTs last week, "munis have given up their earlier performance advantage for August with both asset classes currently earning virtually the same negative returns," said Jeff Lipton, managing director of credit research at Oppenheimer Inc.
Losses for August climbed last week, with month-to-date returns in the red at negative 1.40% on the Bloomberg muni index, high-yield seeing 0.99% losses, taxables at 2.01% losses and the impact index losing 1.70%.
Investors will be greeted Monday with a decrease in supply with the new-issue calendar estimated at $6.711 billion, down from total sales of $10.318 billion.
New York Dormitory Authority school bonds and Northwell Health priced and upsized, while Wisconsin and Oregon offered general obligation bonds. Analysts say municipal curves are oversold, creating a buying opportunity.
Despite outsized volatility and liquidity challenges ahead, the possibility of relief for munis is not too far off, analysts say, but USTs lead the way for exempts.