Municipals were firmer ahead of a smaller new-issue calendar, as U.S. Treasury yields fell and equities ended mixed.
"A solid January employment report already halted the Treasury market rally last Friday," while this week's consumer price index report caused more "bear steepening" of the Treasury curve, said BofA strategists.
In contrast, additional tariff announcements seem to have less impact on rates this week, they said.
"This week's rate volatility made muni trading challenging as Treasury rates have been moving up and down abruptly on the back of inflation releases and tariff news," said Barclays strategist Mikhail Foux.
"Going forward, muni investors should prepare to work in an environment with range-bound Treasuries yields for many months to come until there is a clear cooling of inflation," BofA strategists said.
Furthermore, the market environment will remain "quite challenging," Foux said.
Issuance next week falls to an estimated $5.5 billion due to the holiday-shortened week, but supply will likely remain healthy for the rest of February. The Bond Buyer 30-day visible supply is at $10.42 billion.
Supply/demand remains strong, said BofA strategists.
"Large redemption volumes and coupon payments will continue to overwhelm issuance, and mutual funds inflows are largely positive," they said.
Issuance month-to-date shows "some revival of refunding volumes on the heels of the market rally prior to the
From mid-January to early February, the 10-year muni yield fell around 35 basis points, which was enough to bring in $4.2 billion of refunding month-to-date.
Muni-UST ratios have cheapened slightly, BofA strategists said.
The two-year municipal to UST ratio Friday was at 63%, the five-year at 64%, the 10-year at 68% and the 30-year at 86%, according to Municipal Market Data's 3 p.m. EST read. ICE Data Services had the two-year at 61%, the five-year at 63%, the 10-year at 66% and the 30-year at 83% at 3:15 p.m.
The AAA curve "steepened significantly" in recent weeks, showing investors are more defensive about duration exposures, they said.
"The 1s10s AAA slope is now at 37bp, which should be compared to a deeply inverted -70bp less than a year ago," BofA strategists said. "The 10s30s slope also steepened above 100bp, but is still about 20bp below 2024's steepest level."
New-issue calendar
Issuance for next week rises to an estimated $5.535 billion, with $4.367 billion of negotiated deals and $1.169 billion of competitive deals on tap.
Miami-Dade County, Florida, leads the negotiated calendar with $526 million of airport revenue bonds, followed by the Pennsylvania Economic Development Financing Authority with $500 million of taxable Economic Development and Infrastructure programs revenue bonds.
The competitive calendar is led by Guilford County with $570 million of GO school bonds.
AAA scales
MMD's scale was bumped two to four basis points: The one-year was at 2.66% (-2) and 2.68% (-2) in two years. The five-year was at 2.77% (-2), the 10-year at 3.02% (-3) and the 30-year at 4.01% (-4) at 3 p.m.
The ICE AAA yield curve was bumped up to three basis points: 2.70% (unch) in 2026 and 2.67% (-2) in 2027. The five-year was at 2.77% (-2), the 10-year was at 2.99% (-3) and the 30-year was at 3.93% (-3) at 3:15 p.m.
The S&P Global Market Intelligence municipal curve was bumped three basis points: The one-year was at 2.68% (-3) in 2025 and 2.69% (-3) in 2026. The five-year was at 2.77% (-3), the 10-year was at 3.00% (-3) and the 30-year yield was at 3.94% (-3) at 3 p.m.
Bloomberg BVAL was bumped three to four basis points: 2.58% (-3) in 2025 and 2.65% (-3) in 2026. The five-year at 2.75% (-3), the 10-year at 2.99% (-4) and the 30-year at 3.93% (-4) at 3:15 p.m.
Treasuries were firmer.
The two-year UST was yielding 4.262% (-5), the three-year was at 4.274% (-5), the five-year at 4.332% (-6), the 10-year at 4.479% (-5), the 20-year at 4.758% (-4) and the 30-year at 4.700% (-4) at 3:15 p.m.
Primary to come
Miami-Dade County, Florida, (/A+/A+/AA-/) is set to price Thursday $525.93 million of airport revenue bonds, consisting of $263.765 million of AMT Series 2025A bonds, terms 2050, 2055; $71.62 million of non-AMT Series 2025B bonds, terms 2050, 2055; and $190.545 million of taxable Series 2025C bonds, term 2048. Siebert Williams Shank.
The Pennsylvania Economic Development Financing Authority (Aa3//AA-/) is set to price Wednesday $500 million of taxable Economic Development and Infrastructure programs revenue bonds, serials 2026-2042, term 2054. BofA Securities.
The Board of Regents of the Texas Tech University System (Aa1/NR/AA+/AA+/) is set to price Thursday $298.375 million of revenue financing system refunding and improvement bonds, serials 2026-2045, terms 2050, 2055. Siebert Williams Shank.
The New Hope Cultural Education Facilities Finance Corp. is set to price Wednesday $248.075 million of non-rated Superior Living Foundation Project senior living revenue bonds, Series 2025A, terms 2035, 2045, 2056. Oppenheimer.
The Wisconsin Health and Educational Facilities Authority (A1/AA-/NR/NR/) is set to price Thursday $235.02 million of Aspirus Obligated Group revenue bonds, serials 2034-2045, terms 2050, 2055, 2055. Barclays.
The Union Sanitary District Financing Authority (/AAA//) is set to price Wednesday $192.89 million Alameda County interim notes, Series 2025A, serial 2030. RBC Capital Markets.
The Oregon City School District No. 62 (/AA+//) is set to price Wednesday $162.999 million of GOs, consisting of $26.349 million of Series 2025A and $113.65 million of Series 2025B. Piper Sandler.
The Houston Independent School District is set to price Wednesday $151.245 million of refunding bonds, consisting of $116.325 million of PSF-guaranteed Series 2025A limited tax bonds (Aaa/AAA//), serials 2029-2032, 2034-2037, 2039-2042; and $34.92 million of non-PSF-guaranteed maintenance tax bonds, serials 2031-2033, 2035-2037. Siebert Williams Shank.
The San Mateo County Transit District (/AAA//) is set to price Wednesday $122.145 million of limited tax refunding bonds, 2025 Series A, serials 2026-2034. BofA Securities.
The State of New York Mortgage Agency (Aa1/NR/NR/NR) is set to price Thursday $100 million of social homeowner mortgage revenue bonds, consisting of $79.515 million of non-AMT Series 266 bonds and $20.485 million of AMT Series 267 bonds. Morgan Stanley.
Competitive
Guilford County (Aaa/AAA//) is set to sell $570 million of GO school bonds at 11 a.m. Thursday.
Hudson County is set to sell $210.955 million of bond anticipation notes at 11 a.m. Thursday.
