Municipals were firmer Wednesday as muni mutual funds saw inflows top $2 billion and Pennsylvania led the new-issue calendar with $1.6 million of general obligation bonds in three series. U.S. Treasury yields fell slightly and equities ended up.
The two-year muni-to-Treasury ratio Wednesday was at 63%, the three-year at 62%, the five-year at 64%, the 10-year at 69% and the 30-year at 86%, according to Refinitiv Municipal Market Data's 3 p.m. EST read. ICE Data Services had the two-year at 63%, the three-year at 63%, the five-year at 63%, the 10-year at 68% and the 30-year at 84% at 3:30 p.m.
The Investment Company Institute reported $2.103 billion of
This marks 10 consecutive weeks of inflows and five straight weeks of inflows topping $1 billion.
Exchange-traded funds saw $252 million of outflows after $810 million of inflows the previous week.
The muni market enters the last quarter of 2024 in "excellent shape," said GW&K Investment Management partners John Fox, Brian Moreland, Kara South and Martin Tourigny.
Tax-exempt yields, despite falling from year-to-date highs in May, remain "elevated" compared to historical standards, they said.
Furthermore, "the yield curve has normalized, with the middle portion now back to an upward slope, improving the prospects for roll and increasing expected return in the coming months," GW&K Investment Management strategists said.
On the fundamental side, they noted "state and local governments continue to enjoy a stable financial outlook, with most looking at low-single-digit revenue gains, manageable expense growth, and significant financial flexibility, a product of robust reserve balances."
However, they noted there may be some near-term volatility with the rapid influx of supply, seasonally low reinvestment flows, and caution ahead of the November election.
Despite these challenges, the Fed's ongoing easing cycle could be a good thing, GW&K Investment Management strategists said.
"The tailwind of the Fed's easing cycle, still in its early innings, should help to counter any hesitation to step into the market, as the desire to lock in favorable tax-equivalent yields before they decline may be hard to resist," they said. "In that way, we would likely view any market selloff this fall as a buying opportunity."
In the competitive market Wednesday,
The state also sold $687.5 million of GOs, First Series of 2024, Bid Group B, to Morgan Stanley, with 5s of 2035 at 3.00%, 5s of 2039 at 3.22% and 4s of 2044 at 4.00%.
Pennsylvania sold $237.1 million of refunding GOs, First Series of 2024, Bid Group A, to Wells Fargo, with 4s of 2/2025 at 3.38%, 4s of 2029 at 2.64% and 4s of 2034 at 3.00%, noncall.
The California State Public Works Board (Aa3/A+/AA-/) sold $210.31 million of various capital projects lease revenue various purpose bonds, Series 2024D, to BofA Securities, with 5s of 11/2025 at 2.73%, 5s of 2029 at 2.49%, 5s of 2034 at 2.88%, 3s of 2039 at 3.65%, 4s of 2044 at 3.84% and 4s of 2049 at 4.02%, callable 11/1/2034.
Nevada sold $116.51 million of GO limited tax capital improvement and historical preservation bonds, Series 2024A, to Jefferies, with 5s of 5/2025 at 3.15%, 5s of 2029 at 2.55%, 5s of 2034 at 2.92%, 3s of 2039 at 3.68% and 3s of 2044 at 3.97%, callable 11/1/2034.
In the negotiated market, Siebert Williams Shank priced for
The second tranche, $141 million of Series 2024B bonds, issued through the California Infrastructure and Economic Development Bank, saw 5s of 11/2029 at 2.75%, 5s of 2034 at 3.18%, 5s of 2039 at 3.44%, 5s of 2044 at 3.85%, 5s of 2049 at 3.97%, 5s of 2054 at 4.04% and 5s of 2059 at 4.16%.
Wells Fargo priced for Louisiana (Aa3/AA//) $291.425 million of gasoline and fuels tax second lien revenue refunding bonds, 2024 Series A, with 5s of 5/2026 at 2.78%, 5s of 2029 at 2.58%, 5s of 2034 at 3.03%, 5s of 2039 at 3.33% and 4s of 2044 at 4.03%, callable 5/1/2034.
BofA Securities priced for Orlando (/AAA/AAA/) $149.97 million of water reclamation system revenue and refunding bonds. The first tranche, $132.83 million of improvement bonds, Series 2024A, saw 5s of 10/2025 at 2.74%, 5s of 2029 at 2.48%, 5s of 2034 at 2.88%, 5s of 2039 at 3.16%, 5s of 2044 at 3.56%, 5s of 2049 at 3.78% and 5s of 2054 at 3.88%, callable 10/1/2034.
The second tranche, $17.14 million of refunding bonds, Series 2024B, saw 5s of 10/2025 at 2.74%, 5s of 2029 at 2.48% and 5s of 2032 at 2.71%, noncall.
Jefferies priced for the Clear Creek Independent School District, Texas, (Aaa//AAA/) $140.395 million of unlimited tax refunding bonds. The first tranche, $129.69 million of PSF-guaranteed bonds, Series 2024A, saw 5s of 2/2026 at 2.80%, 5s of 2029 at 2.64%, 5s of 2034 at 3.04%, 4.5s of 2039 at 3.47% and 4.5s of 2040 at 3.55%, callable 2/15/2034.
The second tranche, $10.705 million of non-PSF-guaranteed bonds. Series 2024B, saw 5s of 2/2029 at 2.70%, noncall.
BOK Financial Securities priced for the Grayson County Junior College District, Texas, (Aa2//AA/) $104.15 million of GOs, with 5s of 2/2028 at 2.72%, 5s of 2029 at 2.72%, 5s of 2034 at 3.14%, 5s of 2039 at 3.47%, 5s of 2044 at 3.84% and 4s of 2049 at 4.23%, callable 2/15/2034.
AAA scales
Refinitiv MMD's scale was bumped two to three basis points out longer: The one-year was at 2.73% (unch) and 2.47% (unch) in two years. The five-year was at 2.44% (unch), the 10-year at 2.78% (unch) and the 30-year at 3.66% (-3) at 3 p.m.
The ICE AAA yield curve was bumped up to four basis points: 2.75% (unch) in 2025 and 2.51% (-1) in 2026. The five-year was at 2.43% (-2), the 10-year was at 2.73% (-2) and the 30-year was at 3.61% (-1) at 3:30 p.m.
The S&P Global Market Intelligence municipal curve was bumped up to three basis points: The one-year was at 2.75% (-2) in 2025 and 2.51% (unch) in 2026. The five-year was at 2.45% (unch), the 10-year was at 2.75% (unch) and the 30-year yield was at 3.61% (-3) at 3 p.m.
Bloomberg BVAL was bumped one to four basis points: 2.73% (-1) in 2025 and 2.48% (-1) in 2026. The five-year at 2.45% (-1), the 10-year at 2.72% (-2) and the 30-year at 3.59% (-4) at 3:30 p.m.
Treasuries saw small gains.
The two-year UST was yielding 3.934% (-1), the three-year was at 3.843% (-2), the five-year at 3.843% (-1), the 10-year at 4.015% (-2), the 20-year at 4.365% (-2) and the 30-year at 4.301% (-2) at 3:35 p.m.
Primary to come:
Chicago (//A+/A+/) is set to price Thursday $1.575 billion of Chicago O'Hare International Airport general airport senior lien revenue bonds, consisting of $515.72 million of AMT refunding bonds, Series 2024C; $840.05 million of non-AMT refunding bonds, Series 2024D; $158.43 million of AMT bonds, Series 2024E; and $61.225 million of non-AMT bonds, Series 2024F. J.P. Morgan.
The New Jersey Transportation Trust Fund Authority (A2/A-/A/) is set to price Thursday $1.5 billion of transportation system bonds, consisting of tax-exempt 2024 Series A bonds and taxable 2024 Series B bonds, serials 2032-2039. BofA Securities.
The New Jersey Transportation Trust Fund Authority (A2/A-/A/A/) is also set to price Thursday $1.2 billion of transportation program bonds, consisting of $700 million of tax-exempts, Series 2024-AA, serials 2039-2042, and $500 million of taxables, Series 2024-BB, serials 2025-2027. BofA Securities.
The Dormitory Authority of the State of New York (Baa3/BBB-//) is set to price Thursday $500 million of White Plains Hospital Obligated Group revenue bonds, serials 2038-2053, terms 2058, 2063. BofA Securities.
The Dormitory Authority of the State of New York (Baa3/BBB-//) is set to price Thursday $111.225 million of Montefiore Obligated Group Revenue bonds, serials 2025-2026, 2030-2044, term 2047. BofA Securities.
The Torrance Unified School District, California, (Aa2/AA//) is set to price Thursday $110.385 million of GOs. Piper Sandler.
Competitive:
The Metropolitan Governments of Nashville and Davidson Counties, Tennessee, (Aa2/AA+//) is set to sell Thursday $314.47 million of GO improvement bonds, Series 2024C, at 10:45 a.m. eastern Thursday, $266.385 million of GO improvement bonds, Series 2024A, at 10:15 a.m. Thursday, and $205.805 million of GO improvement bonds, Series 2024B, at 10:30 a.m. Thursday.
Suffolk County, New York, is set to sell $164.415 million of public improvement serial bonds, Series 2024A, at 11 a.m. Thursday.
