Excerpt from...

Dislocations in trading, pricing remain in municipal market

By Lynne Funk, Christine Albano, Chip Barnett
Apr 30, 2020

The municipal secondary was steady according to AAA benchmarks but several trades pointed to dislocations on several high-grade names.

Market participants indicated the dislocations were likely attributable to month-end accounting issues.

There still was a relatively quiet tone in the market Thursday (Apr 30, 2020) spurred by a range of technical issues, from month-end accounting and financing to spread widening, price volatility and the COVID-19 impact on businesses and the economy, sources said.

“It’s a day with scales unchanged, but certainly a wariness in the muni markets,” John R. Mousseau, president and chief executive officer and director of fixed income at Cumberland Advisors, said Thursday afternoon.

“There’s clearly a hangover from Mitch McConnell's statement from last week,” he added, pointing to the U.S. Senate Majority Leader’s comments on April 22 that cash-strapped states impacted by COVID-19 declare bankruptcy.

“The big question is do we ramp back to 95% economic activity pre-crisis — which is still a recession — or to 80% of pre-crisis, which is near Depression levels,” Mousseau said.

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