Municipals were steady Monday as U.S. Treasuries were firmer and equities ended down.
The two-year municipal to UST ratio Monday was at 64%, the five-year at 66%, the 10-year at 69% and the 30-year at 88%, according to Municipal Market Data's 3 p.m. EST read. ICE Data Services had the two-year at 64%, the five-year at 65%, the 10-year at 68% and the 30-year at 86% at 4 p.m.
February was a "positive month" for munis as the asset class saw gains of 0.99%, adding onto January's rally to push year-to-date returns to 1.50%.
High-yield munis are seeing 1.25% returns in February and 2.02% year-to-date, while taxables saw positive returns of 2.85% last month and 3.33% during the first two months of the year.
U.S. Treasuries are up 2.16% in February and 2.68% year-to-date, while corporates saw gains of 2.04% last month and 2.60% so far this year.
"February saw muni yields in the front end of the curve fall about 15 basis points with returns of 0.67%, the belly of the curve seeing a 16-basis point drop in yields with returns of around 1%, while the long end saw yields fall by about 4 basis points with gains of about 0.98%," said Jason Wong, vice president of municipals at AmeriVet Securities.
Last week, the muni market "struggled to keep up with the rate rally as the ongoing uptick in new issue supply, unattractive starting valuations and overall volatility has left many buyers on the sidelines despite cash flowing into the market," said Birch Creek strategists in a weekly report.
"Apathy and caution" were the theme of the past week, they said, citing various dealers.
"The hope is that if Treasuries can stay in the current range (or rally further), buyers will get more comfortable," Birch Creek strategists said.
Currently, most investors prefer to wait for new issues "given the concessions relative to secondary trading and are content to hold bigger cash buffers to take advantage of higher yields if rates begin drifting up again," they said.
Market technicals remain "strong," but March and April are anticipated to bring positive net supply, potentially one of the reasons for investor caution," Birch Creek strategists said.
Other strategists, like Mikhail Foux of Barclays, are also somewhat cautious.
"Historically, March is not such a bad month for munis (aside from 2020 due to COVID and 2022 due to interest rate hikes), but returns are typically just 0.3-0.5% apart from last year when the muni market did really well in March," he said.
However, redemptions this year will continue to be subdued, while supply should be heavy enough likely pushing net issuance to more than $17 billion, Foux said.
Tax-related selling also weighs on the market over the next two months and 2025 should not be any different, he said.
Meanwhile, rates will likely remain "choppy," unless the U.S. economy continues slowing down, Foux said.
"As a result, we remain somewhat cautious but think tax-exempts may offer value in the future if they underperform USTs due to poor technicals in March," he said.
AAA scales
MMD's scale was little changed: The one-year was at 2.54% (unch, no March roll) and 2.54% (unch, no March roll) in two years. The five-year was at 2.63% (unch, no March roll), the 10-year at 2.87% (unch, +1bp March roll) and the 30-year at 3.93% (unch) at 3 p.m.
The ICE AAA yield curve was little changed: 2.57% (-1) in 2026 and 2.55% (+1) in 2027. The five-year was at 2.63% (+1), the 10-year was at 2.86% (+1) and the 30-year was at 3.83% (+1) at 4 p.m.
The S&P Global Market Intelligence municipal curve was unchanged: The one-year was at 2.59% in 2025 and 2.59% in 2026. The five-year was at 2.65%, the 10-year was at 2.88% and the 30-year yield was at 3.84% at 4 p.m.
Bloomberg BVAL was unchanged: 2.49% in 2025 and 2.55% in 2026. The five-year at 2.62%, the 10-year at 2.86% and the 30-year at 3.86% at 4 p.m.
Treasuries were firmer.
The two-year UST was yielding 3.942% (-5), the three-year was at 3.923% (-5), the five-year at 3.957% (-6), the 10-year at 4.148% (-6), the 20-year at 4.477% (-5) and the 30-year at 4.443% (-5) near the close.
Primary to come
New York City (Aa2/AA/AA/AA+/) is set to price $1.407 billion of GOs on Wednesday, consisting of $500 million Series E bonds, serials 2026-2045, terms 2050 and 2055; and $906.82 million refunding Series F bonds, serials 2025-2043. Ramirez.
The Regents of the University of California (Aa2/AA/AA/) plans to price $1.208 billion general revenue bonds, consisting of $320.545 million of Series CB, serials 2029-2030, 2036-2040; and $887.005 million of Series CC, serials 2029-2045, terms 2052 and 2055. RBC Capital Markets.
The Kentucky State Property and Buildings Commission (Aa3/NR/AA-/NR/) plans to price Wednesday $829.83 million Project No. 132 revenue bonds, consisting of $700 million of Series 2025A bonds, serials 2026-2045; and $129.83 million of Series 2025B refunding bonds, serials 2027-2036. BofA Securities.
The Massachusetts Development Finance Agency plans to price $500 million of Series 2025A revenue bonds for Harvard University. Goldman Sachs.
Stanford University (Aaa/AAA/AAA/NR/) plans to price Wednesday $327 million of Series 2025 A taxable bonds. Morgan Stanley.
The Pennsylvania Housing Finance Agency (Aa1/AA+//) plans to price Wednesday $326.81 million single-family mortgage revenue bonds, consisting of $262.94 million Series 148A non-AMT social bonds, serials 2026-2037, terms 2040, 2045, 2050 and 2055; and $63.87 million of Series 148B taxable bonds, serials 2026-2037, terms 2040, 2045, 2050, 2054 and 2055. Wells Fargo.
The California Educational Facilities Authority (Aaa/AAA//) is set to price $319 million of Series V-4 revenue bonds for Stanford University. Goldman Sachs.
El Paso, Texas, (NR/AA/AA+/NR/) plans to price Tuesday $299.07 million of water and sewer revenue refunding bonds, serials 2026-2045, term 2050. Morgan Stanley.
The Orange County Local Transportation Authority, California, (NR/AAA/AA+/NR/) plans to price Wednesday $232.98 million of Measure M2 sales tax revenue refunding bonds, serials 2026-2041. BofA Securities.
The New Hope Cultural Education Facilities Finance Corp. plans to price Wednesday $231.585 million of non-rated retirement facility revenue refunding bonds (Bella Vida Forefront Living project). Ziegler.
The New York State Housing Finance Agency (Aaa///) plans to price $231 million 160 West 62nd Street housing revenue bonds, consisting of $155 million of Series A1 and $76 million of Series A2. Wells Fargo.
The Houston Independent School District (Aaa/AAA//) plans to price Thursday $186.155 million of PSF-insured limited tax refunding bonds, Series 2025B, serial 2026. RBC Capital Markets.
Forest Hills Public Schools, Michigan, (Aa2///) plans to price Tuesday $173.35 million of 2025 school building and site bonds, Series I, serials 2026-2045. Stifel.
The Virginia Housing Development Authority (Aa1/AA+//) plans to price Tuesday $172.52 million of non-AMT rental housing bonds, Series 2025A, serials 2027-2037, terms 2040, 2045, 2050, 2055, 2060, 2068. Raymond James.
The School Board of Manatee County, Florida, (/A+/A+/) plans to price Tuesday $139.255 million Florida master lease program certificates of participation, Series 2025A, serials 2026-2045. BofA Securities.
The Nevada Housing Corp. (NR/AA+/NR/NR/) plans to price Wednesday $138 million of senior single-family mortgage revenue bonds, consisting of $30 million of non-AMT Series 2025A bonds and $108 million of taxable Series 2025B. J.P. Morgan.
The Arizona Industrial Development Authority plans to price Tuesday $134.96 million of senior living revenue bonds, consisting of $199.11 million of Series A, $3.35 million of Series B and $12.5 million of Series C. H.J. Sims.
The Racine Unified School District, Wisconsin, (Aa3///) plans to price Tuesday $130.82 million GO promissory notes, serials 2026-2030, 2032-2045. Baird.
The Board of Trustees for Mesa University, Colorado, (Aa2/NR/NR/NR/) plans to price Tuesday $117.545 million of institutional enterprise revenue and refunding bonds, Series 2025A, serials 2025-2045, terms 2050, 2055. Jefferies.
The Adams County School District 14, Colorado, (Aa2/AA//) plans to price Tuesday $113.9 million GOs, serials 2025, 2032-2044. RBC Capital Markets.
Marion, Illinois, plans to price Tuesday $112.44 million of sales tax revenue bonds (STAR bonds District Project Area No. 1), terms 2045, 2055. Stifel.
The California Public Finance Authority plans to price $102.12 million senior living revenue bonds, consisting of $96.775 million of Series A, $2.345 million of Series B and $3 million of Series C. HJ Sims.
Competitive
The California Department of Water Resources (Aa1/AAA//) will take bids on $336 million of Central Valley Project Water System revenue bonds at 11:30 a.m., Eastern, Tuesday.
Wisconsin will bring $253.905 million of GOs, Series A, on Wednesday at 10:45 a.m.
Mobile, Alabama, (Aa2/AA//) will bring $226.485 million GO warrants, Series 2025A, on Wednesday at 10 a.m.
Cambridge, Massachusetts, (Aaa/AAA/AAA/) will bring $166 million of GO municipal purpose loan of 2025 on Wednesday at 11 a.m.
Clark County, Nevada, (Aa1/AAA//) will auction $126 million of limited tax GO flood control refunding bonds at 11:15 a.m. Tuesday.
Johnston County, North Carolina, (Aaa/AAA//) will auction $100 million general obligation bonds at 11 a.m. Tuesday.
