Municipals were firmer Thursday as muni mutual fund outflows slowed. U.S. Treasury yields fell and equities ended up.
Muni yields were bumped up to seven basis points, depending on the curve, while UST yields fell six to 10 basis points.
The two-year ratio Thursday was at 79%, the five-year at 79%, the 10-year at 80% and the 30-year at 94%, according to Municipal Market Data's 3 p.m. EDT read. ICE Data Services had the two-year at 77%, the five-year at 77%, the 10-year at 78% and the 30-year at 93% at 4 p.m.
"They love munis, they love them (less?) — depending on the day and circumstances," said Kim Olsan, senior fixed income portfolio manager at NewSquare Capital.
"With the recent announcement of a 90-day pause on all reciprocal tariffs except those imposed on China, risk markets have stabilized, and we anticipate a rebound in municipal bonds in the days ahead," said BlackRock strategists.
Muni yields have firmed over the past two trading days but the asset class is still seeing losses. Munis are seeing negative returns of 1.67% month-to-date, but better than the losses seen during the first nine days of the month at negative 3.77%.
"Helped by the UST complex that warmed to the idea of 1) stable FOMC leadership and 2) deceleration of U.S./China tariff talks," munis have found much-needed support over the past two trading sessions, Olsan said.
However, "supply-and-demand dynamics remain a headwind," BlackRock strategists said.
"Demand waned amid heightened uncertainty and tax loss harvesting, with outflows accelerating amid the market turmoil," they said. "At the same time, the transition from net negative to net positive supply combined with reduced liquidity from lighter dealer participation [will] place added pressure on the market."
While several deals were delayed or moved to the day-to-day calendar in early April, BlackRock strategists think the new-issue market will normalize and issuers will continue to front-run
The rebound on Wednesday helped set up better access for several issues, Olsan said.
Three large state GO credits priced Wednesday with "bullish-leaning results," she said.
Massachusetts' GO offering pared yields five basis points in series due 2038 to 2055, with the 5s in 2055 yielding 4.76%, 89 basis points higher than the 30-year maturity from the state's deal in December, she noted.
Connecticut's GOs saw larger cuts to yields, "where intermediate yields finished around 3.75% and long maturities came above 4.50% — also a material rise from the last sale in October," Olsan said.
"Secondary trading along the entire curve suggests several allocation themes are in play," she said.
Weekly reset floater yields have "receded from the pre-tax day spike to settle around 3.75% but fixed maturities out to 10 years are trading near 3.50%," Olsan said.
The current 10s5s AAA MMD curve is 32 basis points, "well steeper" than the negative six basis point low from June, she said.
Further out the curve, the 20s10s slope is near a yearly high of 86 basis points with raw yields in the mid-4.00% area, Olsan said.
In the primary market Thursday, BofA Securities priced for Mesa, Arizona, (A1/AA//) $296.94 million of utility systems revenue obligations, with 5s of 7/2026 at 3.20%, 5s of 2030 at 3.32%, 5s of 2035 at 3.72%, 5s of 2040 at 4.16%, 5s of 2045 at 4.58% and 4.5s of 2049 at 4.50%, callable 7/1/2035.
Barclays priced for the Illinois Finance Authority (A3//A-/) $276.325 million of Silver Cross Hospital and Medical Centers revenue refunding bonds.
The first tranche, $206.325 million of Series A, saw 5s of 8/2026 at 3.56%, 5s of 2030 at 3.83%, 5s of 2035 at 4.23%, 5s of 2040 at 4.60% and 5s of 2041 at 4.71%, callable 8/15/2035.
The second tranche, $35 million of Series B-1, saw 5s of 8/2043 with a mandatory tender date of 8/15/2030 at 3.95%, callable 5/15/2030.
The third tranche, $35 million of Series B-2, saw 5s of 8/2044 at 4.35%, callable 2/15/2035.
Wells Fargo priced for the National Finance Authority $198.68 million of non-rated special revenue bonds, with 5.875s of 12/2033 at 6.00%, callable 12/15/2026.
Goldman Sachs priced for the Dormitory Authority of the State of New York (A3/A//) $165.31 million of Barnard College revenue bonds, Series 2025A, with 5s of 7/2029 at 3.68%, 5s of 2030 at 3.73%, 5s of 2035 at 4.11%, 5.25s of 2040 at 4.53%, 5.25s of 2045 at 4.97%, 5s of 2050 at 5.15% and 5s of 2055 at 5.20%, callable 7/1/2035.
In the competitive market, Clark County School District, Nevada, (A1/AA-//) sold $200 million of limited tax GO building bonds, Series 2025A, to BofA Securities, with 5s of 6/2026 at 3.25%, 5s of 2030 at 3.42%, 5s of 2035 at 3.81%, 4s of 2040 at 4.40% and 3s of 2045 at 4.85%, callable 6/15/2035.
Fund flows
Investors pulled $397.4 million from municipal bond mutual funds in the week ended Wednesday, following $1.258 billion of outflows the prior week, according to LSEG Lipper data. This marks seven consecutive weeks of outflows.
High-yield funds saw outflows of $142.2 million compared to the previous week's outflows of $522.3 million.
Tax-exempt municipal money market funds saw inflows of $2.53 billion for the week ending April 22, bringing total assets to $135.48 billion, according to the Money Fund Report, a weekly publication of EPFR.
The average seven-day simple yield for all tax-free and municipal money-market funds rose to 3.52%.
Taxable money-fund assets saw $35.43 billion added, bringing the total to $6.728 trillion.
The average seven-day simple yield was at 4.00%.
The SIFMA Swap Index fell to 3.62% on Wednesday compared to the previous week's 4.37%.
AAA scales
MMD's scale was bumped two to five basis points: The one-year was at 2.95% (-5) and 3.00% (-2) in two years. The five-year was at 3.12% (-3), the 10-year at 3.44% (-3) and the 30-year at 4.48% (-4) at 3 p.m.
The ICE AAA yield curve was bumped five to seven basis points: 3.03% (-6) in 2026 and 3.01% (-6) in 2027. The five-year was at 3.10% (-7), the 10-year was at 3.42% (-6) and the 30-year was at 4.47% (-5) at 4 p.m.
The S&P Global Market Intelligence municipal curve was bumped three to four basis points: The one-year was at 2.96% (-94) in 2025 and 2.99% (-3) in 2026. The five-year was at 3.12% (-3), the 10-year was at 3.44% (-3) and the 30-year yield was at 4.48% (-3) at 4 p.m.
Bloomberg BVAL was bumped up to two basis points: 2.89% (unch) in 2025 and 2.96% (unch) in 2026. The five-year at 3.13% (-2), the 10-year at 3.44% (-2) and the 30-year at 4.48% (-2) at 4 p.m.
Treasuries saw gains throughout the curve.
The two-year UST was yielding 3.789% (-8), the three-year was at 3.79% (-10), the five-year at 3.928% (-10), the 10-year at 4.308% (-8), the 20-year at 4.787% (-7) and the 30-year at 4.764% (-6) near the close.
