Municipals were weaker Tuesday, as U.S. Treasury yields fell and equities ended mixed.
The two-year municipal to UST ratio Tuesday was at 67%, the five-year at 71%, the 10-year at 74% and the 30-year at 90%, according to Municipal Market Data's 3 p.m. EDT read. ICE Data Services had the two-year at 66%, the five-year at 69%, the 10-year at 73% and the 30-year at 90% at 4 p.m.
What's happening to the muni market is the "confluence of modest selling (via fund outflows and retail perhaps pausing during tax season); a heavy new issue calendar; and very thin near-term reinvestment expectations," said Matt Fabian, a partner at Municipal Market Analytics.
Adding to it is the chaos from D.C. as "multiple municipal borrowers are seeing federal grants held back, economic prospects overall are worsening, and Republican attempts, however irrational, to remove or damage the tax exemption are as likely as ever," he said.
U.S. rates overall are at risk, in part from the Republicans' proposal to not pay for permanent extension of the expiring Tax Cuts and Jobs Act individual tax provisions, potentially raising the U.S. debt-to-GDP ratio and more-than-doubling UST par outstanding, Fabian said, citing estimates from the Congressional Budget Office.
There are also "estimates that current year federal tax receipts will underperform by 10% or $500 billion because of IRS cuts, accelerating the X-date to avoid a UST default; still-to-be-felt economic impacts from federal cutbacks … the Fed slowing its rate cut expectations while also slowing the runoff of UST holdings, seemingly to avoid pushing rates higher; and the rising U.S. downgrade likelihood," he said.
Lastly, there is "non-stop tariff drama," Fabian said.
As the tariffs go into effect on April 2, "when it's all said and done throughout all the noise, the global effective tariff rate is going to go up fairly materially," said Mike Medeiros, a macro strategist at Wellington Management.
Markets have grown to expect that right now, and "that has very important implications for the supply of trade with goods globally, for goods price inflation and the sustainability of that and the relationship [the U.S. has] with the rest of the world, particularly its allies," he said.
All of these present a "challenging pathway" for U.S. rates even if there is an economic recession, suggesting the recently "cheap" muni-USTs ratios may be more about overbought USTs than oversold munis, Fabian said.
In the primary market, Raymond James priced for the
Siebert Williams Shank priced for the Peralta Community College District, California, (/AA-/AA-/) $362.82 million of GOs. The first tranche, $118.36 million of tax-exempt Series C-1 bonds, with 5s of 2025 at 2.67%, 5s of 2026 at 2.67%, 5s of 2043 at 3.96%, 5s of 2040 at 4.10%, 5s of 2050 at 4.21% and 5s of 2054 at 4.28%, callable 8/1/2035.
The second tranche, $212.82 million of tax-exempt refunding bonds, saw 5s of 8/2025 at 2.74%, 5s of 2030 at 3.03%, 5s of 2035 at 3.32% and 5s of 2039 at 3.63%, callable 8/1/2035.
Pricing details for the third tranche, $31.64 million of tax-exempt Series C-2 bonds, were unavailable as of 3:30 p.m.
Ziegler priced for the Colorado Health Facilities Authority (//A-/) $146.4 million of Covenant Living Communities and Services revenue bonds, Series 2025A, with 5s of 12/2025 at 3.27%, 5s of 2030 at 3.55%, 5s of 2035 at 3.95%, 5.125s of 2045 at 4.75%, 4.125s of 2050 at 4.90% and 5.125s of 2055 at 4.96%, callable 12/1/2034.
In the competitive market, Metro, Oregon, (Aaa///) sold $200 million of GOs to BofA Securities, with 5s of 6/2026 at 2.69%, 6s of 2030 at 2.90%, 5s of 2035 at 3.30%, 4s of 2040 at 3.89% and 4.25s of 2045 at 4.37%, callable 6/1/2035.
Oklahoma City, Oklahoma, (Aaa/AAA//) sold $160 million of GOs to Goldman Sachs, with 5s of 3/2027 at 2.70%, 5s of 2030 at 2.92%, 5s of 2035 at 3.33%, 4s of 2040 at 4.15% and 4.5s of 2045 at par, callable 3/1/2033.
California (Aa2/AA+/AA/) sold $150 million of non-AMT veterans general obligation Series CX bonds to Barclays, with all bonds priced at par: 3s of 12/2026, 3.25s of 2030, 3.6s of 2035, 4s of 2040, 4.4s of 2045, 4.5s of 2050 and 4.6s of 2055, callable 6/1/2033.
CUSIP requests rises
The aggregate total of identifier requests for new municipal securities — including municipal bonds, long-term and short-term notes, and commercial paper — rose 36.4% in February versus January totals. On a year-over-year basis, overall municipal volumes were up 17.1%.
Texas led state-level municipal request volume with a total of 118 new CUSIP requests in February, followed by New York with 73 and California with 65.
For municipal bond identifier requests specifically, there was an increase of 35.1% month-over-month and requests were up 17.1% year-over-year.
AAA scales
MMD's scale was cut up to five basis points: The one-year was at 2.62% (unch) and 2.69% (+4) in two years. The five-year was at 2.86% (+4), the 10-year at 3.20% (+5) and the 30-year at 4.19% (+3) at 3 p.m.
The ICE AAA yield curve was cut up to four basis points: 2.69% (unch) in 2026 and 2.69% (+2) in 2027. The five-year was at 2.86% (+3), the 10-year was at 3.19% (+3) and the 30-year was at 4.20% (+3) at 4 p.m.
The S&P Global Market Intelligence municipal curve cut up to five basis points: The one-year was at 2.62% (unch) in 2025 and 2.65% (+1) in 2026. The five-year was at 2.84% (+3), the 10-year was at 3.18% (+5) and the 30-year yield was at 4.19% (+3) at 4 p.m.
Bloomberg BVAL cut one to five basis points: 2.55% (+1) in 2025 and 2.64% (+2) in 2026. The five-year at 2.82% (+4), the 10-year at 3.13% (+5) and the 30-year at 4.17% (+3) at 4 p.m.
Treasuries were firmer.
The two-year UST was yielding 4.01% (-3), the three-year was at 3.986% (-3), the five-year at 4.064% (-3), the 10-year at 4.310% (-3), the 20-year at 4.680% (-1) and the 30-year at 4.656 (-1) near the close.
Primary to come
The Department of Airports of the City of Los Angeles (Aa3//AA-/) is set to price Thursday on behalf of the Los Angeles International Airport a $1.534 billion deal, consisting of $1.189 billion of green private activity/AMT subordinate revenue and refunding revenue bonds, serials 2026-2045, terms 2050, 2055; $175.58 million of private activity/AMT subordinate revenue and refunding revenue bonds, 2025 Series B, serials 2026-2045, terms 2050, 2055; and $169.495 million of governmental purpose/Non-AMT subordinate refunding revenue bonds, 2025 Series C, serials 2026-2045. Barclays.
The Public Finance Authority is set to price Wednesday on behalf of the Salina Economic Development Authority, Oklahoma, $1.168 billion of non-rated
The Board of Regents of the Texas A&M University System (Aaa/AAA/AAA/) is set to price Wednesday $372.15 million of Permanent University Fund refunding bonds, Series 2025A. J.P. Morgan.
The Missouri Housing Development Commission (/AA+//) is set to price Wednesday $250 million of non-AMT First Place Homeownership Loan Program single-family mortgage revenue bonds, 2025 Series C (Non-AMT), serials 2026-2037, terms 2040, 2045, 2050, 2055, 2056. Stifel.
Kansas City, Missouri, (Aa2/AA+//) is set to price Thursday $144.315 million of water revenue bonds, Series 2025A. Morgan Stanley.
The Durango School District 9-R, Colorado, (Aa2///) is set to price Wednesday $130 million of Colorado State Intercept Program-insured GOs, serials 2025-2049. RBC Capital Markets.
The Jefferson Public Building Authority (Aa1/AA+//) is set to price Wednesday $106.39 million of School District of the City of Jefferson Project revenue bonds, serials 2036-2055. Raymond James.
Competitive
The Davis School District Board of Education, Utah, is set to sell $100 million of Utah School District Bond Guaranty Program GOs at 11:30 a.m. Thursday.
