Muni yields were steady, while U.S. Treasuries and equities were volatile ahead of and following President Donald Trump's 4 p.m. speech from the Rose Garden, where he rolled out sweeping new tariffs.
Municipals were unchanged throughout the day, while U.S. Treasuries started out a touch firmer midmorning before erasing gains to end weaker ahead of Trump's speech, which coincided with the close of the market.
After the speech and in extended trading, UST yields reversed course and firmed, while equities plunged.
Details surrounding the tariffs — which could be anything from reciprocal tariffs to finally implementing delayed tariffs on Canada and Mexico and on pharmaceuticals — have remained unclear, but uncertainty has plagued the market for weeks.
J.P. Morgan strategists "expect reciprocal tariffs in part as leverage to extract concessions around identified unfair trading practices, but uncertainty is high, both on what will be included initially and what may be rolled back in subsequent days."
"Even as the fundamentals of the global expansion look solid, a surge in imports ahead of expected tariffs and ongoing uncertainty is impacting business sentiment," they said.
Currently, "fear, not fundamentals, is driving markets," said James Pruskowski, chief investment officer at 16Rock Asset Management.
Confidence is "crumbling" under policy uncertainty, as tariffs, along with tax reform, immigration, and spending cuts, are rattling sentiment, he noted.
Concurrently, geopolitical risks are rising, adding "another layer of instability," Pruskowski said.
"Economic data is softening, recession risk is rising, and corporate leaders are bracing for impact," he said. "FedEx's profit warning and plunging CEO confidence flash red, yet the Fed remains focused on inflation, ignoring stagflation risks. Pressure is building, and markets are taking notice."
The two-year municipal to UST ratio Wednesday was at 67%, the five-year at 71%, the 10-year at 76% and the 30-year at 92%, according to Municipal Market Data's 3 p.m. EDT read. ICE Data Services had the two-year at 67%, the five-year at 71%, the 10-year at 76% and the 30-year at 93% at 4 p.m.
The Investment Company Institute reported outflows of $175 million for the week ending March 26, following $19 million of inflows the previous week.
Exchange-traded funds saw outflows of $312 million after $306 million of inflows the week prior, per ICI data.
Muni fundamentals "remain intact, but stress is emerging, particularly in healthcare and higher education, as fiscal and policy risks grow," Pruskowski said. "Liquidity is tightening, and uncertainty is shaking out weak hands."
"Discussions about capping the muni bond tax exemption at 28% have resurfaced," he said. "While every attempt historically has failed, state and local governments, public finance advocates, and market participants remain well-prepared to fight it again."
Regardless of the headline risk, "the underlying reality remains unchanged — munis are too critical to be disrupted without a positive offsetting outcome," he said.
Still, he noted, "the uncertainty adds another layer of pressure in an already volatile environment, particularly when the market holds a one-sided view."
In the primary market Wednesday, J.P. Morgan preliminarily priced for institutions
The second tranche, $1.428 billion of refunding bonds, saw 5s of 3/2026 at 2.73%, 5s of 2030 at 2.96%, 5s of 2035 at 3.46%, 5s of 2038 at 3.66%, 4.125s of 2045 at 4.37% and 5s of 2045 at 4.19%, callable 3/1/2035.
Jefferies priced for the San Francisco Public Utilities Commission (Aa2/AA-//) $523.355 million of San Francisco water revenue refunding bonds. The first tranche, $467.905 million of green water and sewer improvement project bonds, Series 2025A, saw 5s of 11/2025 at 2.60%, 5s of 2030 at 2.72%, 5s of 2035 at 3.14%, 5s of 2040 at 3.61%, 5s of 2045 at 4.06% and 5s of 2047 at 4.12%, callable 5/1/2035.
The second tranche, $37.385 million of regional water and local water bonds, Series 2025B, saw 5s of 11/2025 at 2.60%, 5s of 2030 at 2.72%, 5s of 2036 at 3.31%, 5s of 2040 at 3.61%, 5s of 2045 at 4.06% and 5s of 2047 at 4.12%, callable 5/1/2035.
The third tranche, $18.065 million of Hetch Hetchy water bonds, Series 2025C, saw 5s of 11/2025 at 2.60%, 5s of 2030 at 2.72%, 5s of 2036 at 3.31%, 5s of 2042 at 3.81%, 5s of 2045 at 4.06% and 5s of 2047 at 4.12%, callable 5/1/2035.
BofA Securities priced for Rochester, Minnesota, (Aa2/AA//) on
The second tranche, $91.86 million of Series 2025B, saw 5s of 11/2055 with a mandatory tender date of 5/15/2032 at 3.32%, callable 11/15/2031.
Jefferies priced for Cleveland, Ohio, (A2/A/A-/) $159.575 million of non-AMT airport system revenue bonds, Series 2025A, with 5s of 1/2026 at 2.85%, 5s of 20230 at 3.11% and 5s of 2033 at 3.42%.
AAA scales
MMD's scale was unchanged: The one-year was at 2.61% and 2.63% in two years. The five-year was at 2.81%, the 10-year at 3.21% and the 30-year at 4.19% at 3 p.m.
The ICE AAA yield curve was unchanged: 2.61% in 2026 and 2.63% in 2027. The five-year was at 2.80%, the 10-year was at 3.18% and the 30-year was at 4.20% at 4 p.m.
The S&P Global Market Intelligence municipal curve was unchanged: The one-year was at 2.61% in 2025 and 2.62% in 2026. The five-year was at 2.82%, the 10-year was at 3.20% and the 30-year yield was at 4.18% at 4 p.m.
Bloomberg BVAL was unchanged: 2.51% in 2025 and 2.60% in 2026. The five-year at 2.80%, the 10-year at 3.14% and the 30-year at 4.16% at 4 p.m.
Treasuries were weaker.
The two-year UST was yielding 3.919% (+4), the three-year was at 3.901% (+4), the five-year at 3.961% (+4), the 10-year at 4.196% (+3), the 20-year at 4.58% (+2) and the 30-year at 4.544% (+2) near the close.
Primary to come
The California Educational Facilities Authority is set to price Thursday $600 million of University of Southern California revenue bonds, Series 2025A. Jefferies.
The J. Paul Getty Trust, California, (Aaa/AAA//) is set to price Thursday $500 million of taxable corporate CUSIPs, Series 2025A. Jefferies.
The Agua Fria Union High School District No. 216, Arizona, (Aa1///) is set to price Thursday $100 million of school improvement bonds, projects of 2023 and 2024. Stifel.
Competitive
The Gwinnett County School District, Georgia, (Aaa/AAA//) is set to sell $332.67 million of GO refunding bonds at 11 a.m. Thursday.
