Municipals were little changed Tuesday, ignoring market movements from the newly enacted tariffs.
The two-year municipal to UST ratio Tuesday was at 64%, the five-year at 66%, the 10-year at 68% and the 30-year at 87%, according to Municipal Market Data's 3 p.m. EST read. ICE Data Services had the two-year at 64%, the five-year at 66%, the 10-year at 69% and the 30-year at 86% at 4 p.m.
Tariffs went into effect Tuesday. After a month-long delay, Canada saw 25% tariffs added to non-energy imports and 10% on energy imports, while Mexico saw a 25% tariff on all goods. An additional 10% tariff was added to Chinese imports.
Stocks sold off Tuesday.
Short-end U.S. Treasuries rallied mid-morning, while UST yields were little changed out long, but ended the day weaker across most of the curve, with the greatest losses out long. Munis were steady throughout the day.
"Stocks are getting crushed as investors consider the risks of an expanded trade conflict on corporate America's profitability," said José Torres, senior economist at Interactive Brokers. "Traders are picking up the risk-off playbook in response to Washington implementing levies on products from Canada, China and Mexico by scooping up Treasurys, equity volatility protection, and certain commodities."
"This is likely just the beginning with tariffs on Europe and universal ones to follow suit over the coming weeks," said Andrzej Skiba, head of BlueBay U.S. Fixed Income at RBC Global Asset Management.
"This will be inflationary, and the Fed won't likely be able to cut rates in this environment," he noted, potentially putting pressure on fixed income assets and leading to more spread widening and risk ahead.
"Tariffs are likely to add upward pressure to inflation and be a headwind to economic growth at the margin, an unfavorable combination for risk assets broadly," Josh Jamner, senior investment analyst at ClearBridge Investments.
In the near term, he said, "this risk remains unknown, which could weigh on markets, as the 25% tariffs on Mexican and Canadian imports were not widely expected to come into effect, and many believe they are likely to be at least partially removed (lower rate and/or key exemptions granted) in the coming weeks."
As the trade war unfolds, Jamner said investors will re-price tariff expectations, possibly leading to ongoing market volatility.
Along with tariffs, the increased likelihood of a government shutdown, looming trade wars, and widespread federal job cuts all pose threats in the near term, said Matt Fabian, a partner at Municipal Market Analytics.
"At some point, this could become a spread widener within the municipal sector (as directly or indirectly affected borrowers and sectors see ratings or buyer impacts), but for now, [it] remains the opposite, tightening spreads as buyers seek to allocate," he said.
Elsewhere,
But while February issuance "dropped a bit below 2025's expected record pace, the forward calendar is strong versus seasonals, even as anticipated reinvestment will predictably thin into tax time," Fabian said.
Issuance this week will be "somewhat heavy" as $11 billion is expected to price but should be relatively well absorbed with March 1 coupon payments slated for reinvestment, said Daryl Clements, a portfolio manager at AllianceBernstein.
The new-issue market was particularly busy Tuesday, including several large retail pricings and a sizable prepaid gas deal.
In the primary market, Ramirez held a one-day retail order period for New York City's (Aa2/AA/AA/AA+/) $1.414 billion of GOs. The first tranche, $500 million Series E bonds, saw 5s of 8/2026 at 2.67%, 5s of 2030 at 2.85%, 5s of 2035 at 3.19%, 5s of 2040 at 3.56%, 5s of 2045 at 4.07%, 5.25s of 2050 at 4.20% and 4.25s of 2055 at 4.43%, callable 2/1/2035.
The second tranche, $913.73 million of refunding Series F bonds, saw 5s of 8/2025 at 2.67%, 5s of 2030 at 2.85%, 5s of 2035 at 3.19%, 5s of 2040 at 3.56% and 5s of 2043 at 3.90%, callable 2/1/2035.
RBC Capital Markets held a one-day retail order for the Regents of the University of California's (Aa2/AA/AA/) $1.21 billion general revenue bonds. The first tranche, $324.51 million of Series CB, saw 5s of 5/2029 at 2.53%, 5s of 2030 at 2.55%, 5s of 2036 at 2.96% and 5s of 2040 at 3.30%, callable 5/15/2035.
The second tranche, $885.955 million of Series CC, saw 5s of 5/2029 at 2.53%, 5s of 2030 at 2.55%, 5s of 2035 at 2.88%, 5s of 2040 at 3.30% 5s of 2045 at 3.79%, 4s of 2047 at 4.08%and 4s of 2055 at 4.15%, callable 5/15/2035.
BofA Securities held a one-day retail order for the Kentucky State Property and Buildings Commission's (Aa3/NR/AA-/NR/) $829.83 million Project No. 132 revenue bonds. The first tranche, $700 million of Series 2025A bonds, saw 5s of 4/2026 at 2.74%, 5s of 2030 at 2.91%, 5s of 2035 at 3.23%, 5s of 2040 at 3.65% and 5s of 2045 at 4.16%, callable 4/1/2035.
The second tranche, $129.83 million of Series 2025B refunding bonds, saw 5s of 4/2027 at 2.81%, 5s of 2040 at 2.97%, 5s of 2035 at 3.29% and 5s of 2036 at 3.34%, noncall.
RBC Capital Markets priced for the New Mexico Municipal Energy Acquisition Authority $786.56 million of gas supply revenue refunding and acquisition bonds, with 5s of 11/2025 at 3.55%, 5s of 11/2030 at 3.65%, and 5s of 6/2054 with a mandatory tender date of 11/1/2030 at 3.74%, callable 8/1/2030.
BofA Securities priced for the Missouri Health and Educational Facilities Authority (Aa2/AA/NR/NR/) $569.625 million of BJC Health System health facilities revenue bonds. The first tranche, $454.625 million of Series 2025A, saw 5s of 4/2030 at 2.82%, 5s of 2035 at 3.15%, 5s of 2040 at 3.68%, 4s of 2045 at 4.33% and 4.25s of 2055 at 4.55%, callable 4/1/2035.
The second tranche, $50 million of long-term rate Series 2025B bonds, saw 5s of 4/2059 with a mandatory tender date of 4/1/2032 at 3.08%, noncall.
The third tranche, $65 million of long-term rate Series 2025C bonds, saw 5s of 4/2059 with a mandatory tender date of 4/1/2035 at 3.32%, noncall.
In the competitive market, the California Department of Water Resources (Aa1/AAA//) sold $336 million of Central Valley Project Water System revenue bonds to BofA Securities, with 5s of 12/2026 at 2.24%, 5s of 2030 at 2.31% and 5s of 2033 at 2.43%, noncall.
Clark County, Nevada, (Aa1/AAA//) sold $122.15 million of limited tax GO flood control refunding bonds to UBS, with 4s of 11/2025 at 2.65%, 5s of 2030 at 2.67% and 4s of 2035 at 2.98%, callable 11/1/2034.
Johnston County, North Carolina, (Aaa/AAA//) sold $100 million of GOs to BofA Securities, with 5s of 2/2026 at 2.56%, 5s of 2030 at 2.65%, 5s of 2035 at 2.87%, 5s of 2040 at 3.27% and 4s of 2045 at 3.99%, callable 2/1/2035.
AAA scales
MMD's scale was unchanged: The one-year was at 2.54% and 2.54% in two years. The five-year was at 2.63%, the 10-year at 2.87% and the 30-year at 3.93% at 3 p.m.
The ICE AAA yield curve was little changed: 2.55% (-2) in 2026 and 2.55% (unch) in 2027. The five-year was at 2.63% (unch), the 10-year was at 2.86% (unch) and the 30-year was at 3.83% (unch) at 4 p.m.
The S&P Global Market Intelligence municipal curve was bumped up to a basis point: The one-year was at 2.58% (-1) in 2025 and 2.58% (-1) in 2026. The five-year was at 2.64% (-1), the 10-year was at 2.87% (-1) and the 30-year yield was at 3.84% (unch) at 4 p.m.
Bloomberg BVAL was unchanged: 2.48% in 2025 and 2.54% 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 weaker throughout most of the curve.
The two-year UST was yielding 3.945% (-1), the three-year was at 3.937% (+1), the five-year at 3.994% (+3), the 10-year at 4.205% (+5), the 20-year at 4.548% (+6) and the 30-year at 4.519% (+7) near the close.
Primary to come
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 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.
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 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. H.J. Sims.
Competitive
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.
