Municipals were steady Friday as U.S. Treasuries were slightly weaker out long and equities ended down.
UST yields continued to decline this week as concerns surrounding "growth and perceived dovishness by the Fed have continued buoying the market," said Barclays strategists Mikhail Foux and Grace Cen.
Tax-exempts have lagged "quite a bit," with their ratios "finally reaching extremely attractive levels versus recent history, especially in the belly of the curve, which seems extremely cheap," they said.
The two-year municipal to UST ratio Friday was at 67%, the five-year at 70%, the 10-year at 74% and the 30-year at 91%, according to Municipal Market Data's 3 p.m. EST read. ICE Data Services had the two-year at 67%, the five-year at 70%, the 10-year at 74% and the 30-year at 91% at 4 p.m.
While the long end appears to have found some "sponsorship," the eight- to 12-year part of the yield curve continues to struggle, Barclays strategists said.
March has been a difficult month for tax-exempts, as high grade, and to a lesser extent high-yield, erased all their gains year-to-date, they said.
"In IG, the selloff was centered on high quality (AAAs) and long-dated CUSIPs; in HY, longer-dated credits also came under pressure (aside from longer-dated MSA tobacco bonds that have continued outperforming in 2025)," Barclays strategists said.
"On the one hand, current tax-exempt relative valuations versus Treasuries are the most attractive they have been in well over a year," they said. "On the other hand, we do not expect a quick turnaround — market tone remains subdued, fund flows are anemic, supply has been quite robust, while March and April redemptions will be low, resulting in an increase in net issuance."
Foux and Cen think munis can "find their footing" by the end of April or possibly in early May.
New-issue calendar
Issuance for the week of March 24 is at $7.923 billion, with $6.673 billion of negotiated deals and $1.251 billion of competitive deals on tap.
The Department of Airports of the City of Los Angeles leads the negotiated calendar with a $1.534 billion deal, followed by the Public Finance Authority with $1.168 billion of non-rated American Tire Works Project revenue bonds.
The competitive calendar is led by California with $212.565 million of non-AMT veterans general obligation bonds in two series.
AAA scales
MMD's scale was unchanged: The one-year was at 2.62% and 2.63% in two years. The five-year was at 2.80%, the 10-year at 3.13% and the 30-year at 4.16% at 3 p.m.
The ICE AAA yield curve was little changed: 2.68% (unch) in 2026 and 2.65% (+1) in 2027. The five-year was at 2.81% (+1), the 10-year was at 3.12% (unch) and the 30-year was at 4.14% (unch) at 4 p.m.
The S&P Global Market Intelligence municipal curve was unchanged: The one-year was at 2.62% in 2025 and 2.63% in 2026. The five-year was at 2.80%, the 10-year was at 3.12% and the 30-year yield was at 4.16% at 4 p.m.
Bloomberg BVAL unchanged: 2.53% in 2025 and 2.60% in 2026. The five-year at 2.76%, the 10-year at 3.06% and the 30-year at 4.13% at 4 p.m.
Treasuries were weaker out long.
The two-year UST was yielding 3.945% (-2), the three-year was at 3.924% (-2), the five-year at 4.002% (-1), the 10-year at 4.247% (+1), the 20-year at 4.613% (+3) and the 30-year at 4.590% (+3) near the close.
Primary to come
The Department of Airports of the City of Los Angeles (Aa3//AA-/) is set to price Thursday on behalf of the Los Angeles International Airport a $1.534 billion deal, consisting of $1.189 billion of green private activity/AMT subordinate revenue and refunding revenue bonds, serials 2026-2045, terms 2050, 2055; $175.58 million of private activity/AMT subordinate revenue and refunding revenue bonds, 2025 Series B, serials 2026-2045, terms 2050, 2055; and $169.495 million of governmental purpose/Non-AMT subordinate refunding revenue bonds, 2025 Series C, serials 2026-2045. Barclays.
The Public Finance Authority is set to price Wednesday on behalf of the Salina Economic Development Authority $1.168 billion of non-rated American Tire Works Project revenue bonds, Series 2025A, term 2056. HilltopSecurities.
The New York City Municipal Water Finance Authority (Aa1/AA+/AA+/) is set to price Tuesday $603.715 million of water and sewer system second general resolution revenue refunding bonds, Fiscal 2025 Series CC, serials 2027-2032, 2037-2039, 2046. Raymond James.
The Board of Regents of the Texas A&M University System (Aaa/AAA/AAA/) is set to price Wednesday $372.15 million of Permanent University Fund refunding bonds, Series 2025A. J.P. Morgan.
The Peralta Community College District, California, (/AA-/AA-/) is set to price Tuesday $361.785 million of GOs, consisting of $118.84 million of tax-exempt Series C-1 bonds, serials 2025-2026, 2043-2045, terms 2050, 2054; $211.785 million of tax-exempt refunding bonds, serials 2025-2039; and $31.16 million of tax-exempt Series C-2 bonds, serial 2025. Siebert Williams Shank.
The Missouri Housing Development Commission (/AA+//) is set to price Wednesday $250 million of non-AMT First Place Homeownership Loan Program single family mortgage revenue bonds, 2025 Series C (Non-AMT), serials 2026-2037, terms 2040, 2045, 2050, 2055, 2056. Stifel.
The Texas Water Development Board (/AAA/AAA/) is set to price Tuesday $181.535 million of State Revolving Funds revenue bonds, New Series 2025, serials 2026-2046. Raymond James.
Louisiana (Aa3/AA//) is set to price Tuesday $150 million of gasoline and fuels tax second lien revenue refunding bonds, 2025 Series A. Wells Fargo.
The Colorado Health Facilities Authority (//A-/) is set to price Tuesday $148.62 million of Covenant Living Communities and Services revenue bonds, Series 2025A. Ziegler.
Kansas City, Missouri, (Aa2/AA+//) is set to price Thursday $144.315 million of water revenue bonds, Series 2025A. Morgan Stanley.
The Durango School District 9-R, Colorado, (Aa2///) is set to price Wednesday $130 million of Colorado State Intercept Program-insured GOs, serials 2025-2049. RBC Capital Markets.
The Jefferson Public Building Authority (Aa1/AA+//) is set to price Wednesday $106.39 million of School District of the City of Jefferson Project revenue bonds, serials 2036-2055. Raymond James.
The Mississippi Home Corp. (Aaa///) is set to price Monday $100 million of non-AMT single family mortgage revenue bonds, Series 2025A, serials 2031-2037, terms 2040, 2045, 2050, 2053. Raymond James.
Competitive
California is set to sell $212.565 million of non-AMT veterans general obligation bonds in two series: $62.565 million of Series CW bonds at 11:30 a.m. Tuesday and $150 million of Series CX bonds at 11:30 a.m. Tuesday.
Metro, Oregon, is set to sell $200 million of GOs at noon Tuesday.
The Dorchester County School District No. 2, South Carolina, is set to sell $200 million of South Carolina School District Credit Enhancement Program GOs, Series 2025A, at 11 a.m. Tuesday.
Oklahoma City, Oklahoma, is set to sell $160 million of GOs at 9:30 a.m. Tuesday.
The Davis School District Board of Education, Utah, is set to sell $100 million of Utah School District Bond Guaranty Program GOs at 11:30 a.m. Thursday.
