Municipals were weaker Tuesday as the primary market picked up steam. U.S. Treasury yields fell out long and equities recovered.
The two-year ratio Tuesday was at 82%, the five-year at 82%, the 10-year at 82% and the 30-year at 95%, according to Municipal Market Data's 3 p.m. EDT read. ICE Data Services had the two-year at 82%, the five-year at 80%, the 10-year at 79% and the 30-year at 93% at 4 p.m.
Muni yields were cut up to 11 basis points, depending on the scale.
Muni yields may "continue to stay elevated due to supply and demand factors," rather than concerns over credit quality, said Cooper Howard, a fixed income strategist at Charles Schwab.
The new-issue calendar swells to $14 billion this week, and with postponed deals still awaiting the right market conditions totaling $5.8 billion in supply, the Bond Buyer 30-day visible calendar stands at $23.62 billion.
Supply is expected to remain heavy in the coming weeks and will likely weigh on near-term performance, Howard said.
"However, we would not be surprised if munis begin to attract crossover buyers and outperform Treasuries longer-term," he said.
The tone in the muni market "remains one of consideration: of both the volatility just past and potential volatility still to come," said Matt Fabian, a partner at Municipal Market Analytics.
For the former, "the extremely sharp daily movements in benchmark curves and related price evaluations will compel VAR-driven market makers to reduce near-term net exposure to municipals," he said.
This leads to increased reliance on the street for "trading liquidity and will drag prices lower/yields higher to create better opportunities (and thus attract more participants) to invest in the market," Fabian said.
This can be seen in a spike in SIFMA's 7-day yield to over 100% of SOFR for two weeks, which is a result of dealers attempting to clear VRDOs from their inventories, now over $18 billion for the first time since the first quarter of 2023, he said.
"Finding new trading and buying accounts is also becoming more important ahead of very likely future spikes in volatility emanating from the U.S. Treasury and currency markets," he said.
"These are not just about trade wars, but also a potentially sustained move away from U.S. dollars just as Congress seems to be betting on steady and sustained investor demand to finance large tax cuts and as Fed independence may be threatened," he said.
For munis, demand for 2025's potentially record supply may not be as "reliable" as it appears, especially if yields continue to fall, Fabian said.
Even during last week's holiday-shortened calendar, "customer selling was still a massive amount: around $30 billion; many accounts still liquidating for fear, taxes, or both," he said.
And while exchange-traded funds have been "widely blamed" for liquidity issues, regular mutual funds have erased nearly all inflows year-to-date, Fabian said.
Most of that comes from the week of April 7, the single worst week for combined fund/ETF/2a7 flows since 2020, he said.
In the primary market Tuesday, Barclays held a one-day retail order for Connecticut's (Aa3/AA-/AA-/AA+/) $1.099 billion of GOs. The first tranche, $500 million of Series A bonds, saw 5s of 3/2026 at 3.30%, 5s of 2030 at 3.53%, 5s of 2035 at 3.83%, 5s of 2040 at 4.20% and 5s of 2045 at 4.65%, callable 3/15/2035.
The second tranche, $599.035 million of Series B refunding bonds, saw 5s of 12/2025 at 3.28%, 5s of 2030 at 3.54% and 5s of 2035 at 3.85%, noncall.
Siebert Williams Shank held a one-day retail order for New York City Municipal Water Finance Authority's (Aa1/AA+/AA+/) $677.6 million of water and sewer system second general resolution revenue bonds, Fiscal 2025 Series DD, with 5s of 6/2028 at 3.19%, 5s of 2035 at 3.72%, 5s of 2039 at 4.11%, 5.5s of 2039 at 4.04% and 4s of 2039 at 4.25%, callable 6/15/2035.
J.P. Morgan priced for the Allegheny County Airport Authority (A2/AA/A/A+/) $409.27 million of Assured Guaranty-insured
Details for the second tranche, $48.84 million of taxable Series 2025B bonds, were not available as of 3:45 p.m.
J.P. Morgan priced for the
BofA Securities priced for the Virginia Housing Development Authority (Aaa/AAA//) $210 million of commonwealth mortgage bonds. The first tranche, $70 million of 2024 Series F non-AMT bonds, saw all bonds price at par: 3.5s of 7/2026, 3.9s of 1/2030, 3.95s of 7/2030, 4.4s of 1/2035, 4.45s of 7/2035, 4.65s of 7/2040, 4.95s of 7/2045, 5.05s of 7/2050 and 5.1s of 7/2055, callable 7/1/2034.
The second tranche, $140 million of taxable 2025 Series B bonds, saw all bonds price at par: 4.302s of 7/2026, 4.716s of 1/2030, 4.766s of 7/2030, 5.629s of 1/2035, 5.689s of 7/2035, 5.869s of 7/2040, 6.189s of 7/2045, 6.249s of 7/2050 and 6.279s of 7/2055, callable 7/1/2033.
Siebert Williams Shank priced for the Fort Bend Independent School District, Texas, (/AAA/AAA/) $190.64 million of PSF-insured unlimited tax school building and refunding bonds, Series 2025A, with 5s of 8/2026 at 3.23%, 5s of 2030 at 3.40%, 5s of 2035 at 3.75%, 5s of 2040 at 4.15%, 5s of 2045 at 4.58%, 5s of 2050 at 4.74% and 5s of 2055 at 4.78%, callable 8/15/2034.
Baird priced for the Fort Bend Independent School District, Texas, (/AAA/AAA/) $143.835 million of PSF-insured variable rate unlimited tax school building and refunding bonds, Series 2025B, with 3.8s of 8/2055 at par, noncall.
Barclays priced for Douglas County, Nebraska, (A2///) $140.42 million of Creighton University projects educational facilities revenue and refunding bonds, with 5s of 7/2026 at 3.41%, 5s of 2030 at 3.62%, 5s of 2035 at 4.02%, 4.25s of 2040 at 4.58%, 4.5s of 2042 at 4.79%, 5.25s of 2049 at 5.00% and 5s of 2052 at 5.11%, callable 7/1/2035.
AAA scales
MMD's scale was cut seven to 11 basis points: The one-year was at 3.10% (+7) and 3.12% (+7) in two years. The five-year was at 3.25% (+7), the 10-year at 3.57% (+9) and the 30-year at 4.62% (+11) at 3 p.m.
The ICE AAA yield curve was cut up to four basis points: 3.12% (unch) in 2026 and 3.11% (+1) in 2027. The five-year was at 3.21% (+1), the 10-year was at 3.53% (+2) and the 30-year was at 4.57% (+4) at 4 p.m.
The S&P Global Market Intelligence municipal curve was cut six to 10 basis points: The one-year was at 3.09% (+7) in 2025 and 3.11% (+7) in 2026. The five-year was at 3.24% (+6), the 10-year was at 3.57% (+8) and the 30-year yield was at 4.60% (+10) at 4 p.m.
Bloomberg BVAL was cut eight to 10 basis points: 2.97% (+9) in 2025 and 3.05% (+9) in 2026. The five-year at 3.22% (+10), the 10-year at 3.53% (+8) and the 30-year at 4.60% (+9) at 4 p.m.
Treasuries saw gains 10 years and out.
The two-year UST was yielding 3.81% (+5), the three-year was at 3.816% (+3), the five-year at 3.981% (+1), the 10-year at 4.392% (-2), the 20-year at 4.908% (-4) and the 30-year at 4.822% (-2) near the close.
Primary to come
Massachusetts (Aa1/AA+/AA+/) is set to price Thursday $1.07 billion of GOs, consisting of $600 million of consolidated loan of 2025 Series A bonds, serials 2038-2055, and $470 million of 2025 Series A refunding bonds, serials 2028-2045. Jefferies.
The Los Angeles Unified School District (Aa2//AAA/AAA/) is set to price Wednesday $958.155 million of GOs, consisting of $426.38 million of U.S. Series A-1 bonds, serials 2028-2045, term 2049; $265.475 million of Series A refunding bonds, serials 2026-2030, 2033-2035, 2037-2040; $26.73 million of U.S. Series A-2, serial 2025; and $239.57 million of U.S. Series B bonds, serials 2026-2028. Raymond James.
Los Angeles (/AA-/AA/) is set to price Thursday $803.375 million of wastewater system subordinate revenue bonds, consisting of $197.135 million of Series A bonds, $145.475 million of taxable Series B bonds and $460.765 million of Series C refunding bonds. Goldman Sachs.
The North Carolina Department of State Treasurer (Aa3/AA//) is set to price Wednesday $439.79 million of grant anticipation revenue vehicle bonds and refunding bonds, serials 2026-2040. J.P. Morgan.
Mesa, Arizona, (A1/AA//) is set to price Thursday $277.74 million of utility systems revenue obligations, serials 2026-2045, term 2049. BofA Securities.
The Illinois Finance Authority (A3//A-/) is set to price Thursday $271.98 million of Silver Cross Hospital and Medical Centers revenue refunding bonds, consisting of $201.98 million of Series A, $35 million of Series B-1 and $35 million of Series B-2. Barclays.
The Florida Local Government Finance Commission is set to price $231.19 million of non-rated Convivial Jacaranda Trace Project senior living revenue refunding bonds, consisting of $227.89 million of Series A and $3.3 million of Series B. Ziegler.
The National Finance Authority is set to price $199.775 million of non-rated special revenue bonds, serial 2033. Wells Fargo.
The Dormitory Authority of the State of New York (A3/A//) is set to price Thursday $165.31 million of Barnard College revenue bonds, Series 2025A, serials 2029-2045, terms 2050, 2055. Goldman Sachs.
The Colorado Housing and Finance Authority (Aaa/AAA//) is set to price Wednesday $158.24 million of Class I taxable single-family mortgage bonds, Series H-1, serials 2026-2037, terms 2040, 2042, 2055. RBC Capital Markets.
Raleigh, North Carolina, (Aaa/AAA/AAA/) is set to price Thursday $143.355 million of GOs, consisting of $118.355 million of GO public improvement and refunding bonds, Series 2025A, serials 2026-2045, and $25 million of taxable GO housing bonds, Series 2025B, serials 2026-2040, term 2045. BofA Securities.
Waco, Texas, (Aa1/AA+//) is set to price Wednesday $125.02 million of combination tax and revenue certificates of obligation, serials 2026-2055. RBC Capital Markets.
The New Mexico Mortgage Finance Authority (Aaa///) is set to price Thursday $100 million of Class I tax-exempt non-AMT single-family mortgage program bonds, Series C, serials 2026-2037, terms 2040, 2045, 2050, 2055, 2056. RBC Capital Markets.
Competitive
Washington (Aaa/AA+/AA+/) is set to sell $349.63 million of various purpose GO refunding bonds, Series R-2025D, at 10:15 a.m. Wednesday and $139.685 million of motor vehicle fuel tax and vehicle-related fees GO refunding bonds, Series R-2025E, at 10:45 a.m. Wednesday.
Clark County School District, Nevada, (A1/AA-//) is set to sell $200 million limited tax GO building bonds, Series 2025A, at 11:30 a.m. Thursday.
