Municipals were steady Monday as U.S. Treasuries were narrowly mixed and equities ended up.
Munis continued their January rally heading into the first week of the month as the asset class saw gains of 0.43%, bringing year-to-date gains to 0.94%, said Jason Wong, vice president of municipals at AmeriVet Securities.
"The rally in the muni market this year has put its poor December performance (–1.46%) in the rearview mirror," said Daryl Clements, a municipal portfolio manager at AllianceBernstein.
Dealers reported "limited activity" from real money accounts at the start of the week as the "economic volatility over the past few weeks had left participants with limited conviction," Birch Creek strategists said.
As the week progressed, "a manageable new issue calendar amid seasonally strong reinvestment cash and another week of heavy inflows … was enough to get investors off the sidelines," they said.
Both customer purchase and sale activity rose, with dealer sales up 26% compared to recent averages and bid wanteds up 20%, Birch Creek strategists said, citing J.P. Morgan data.
The two-year municipal to UST ratio Monday was at 61%, the five-year at 62%, the 10-year at 65% and the 30-year at 83%, according to Municipal Market Data's 3 p.m. EST read. ICE Data Services had the two-year at 61%, the five-year at 62%, the 10-year at 65% and the 30-year at 82% at 4 p.m.
Munis continue to outpace USTs as ratios in the front end continue to richen relative to USTs, Wong said.
Ratios in the two- to 10-year range have lowered by roughly 2 percentage points since the beginning of 2024, he said.
Meanwhile, 30-year munis have cheapened relative to USTs by nearly 4 percentage points and have "steadily risen since its low of 78.43% back in early December 2024, indicating the relative attractiveness of the long end as we continue to expect lower rates for 2025," Wong said.
This is evident by the roughly $2.8 billion of inflows in the long-end muni mutual funds since the start of the year, he noted.
"Demand has been insatiable in the muni market this year, with combined mutual fund and exchange-traded fund flows … totaling $5.2 billion," Clements said.
Of that supply, 40% flows into high-yield strategies, while 62% flows into long-duration strategies, he said.
"Investors are being drawn to these strategies given the steepness of the muni curve and the ongoing credit-spread compression, which has led to outperformance," he said.
AAA scales
MMD's scale was unchanged: The one-year was at 2.58% and 2.60% in two years. The five-year was at 2.69%, the 10-year at 2.91% and the 30-year at 3.93% at 3 p.m.
The ICE AAA yield curve was little changed: 2.65% (unch) in 2026 and 2.62% (unch) in 2027. The five-year was at 2.70% (unch), the 10-year was at 2.93% (-1) and the 30-year was at 3.86% (unch) at 4 p.m.
The S&P Global Market Intelligence municipal curve was unchanged: The one-year was at 2.60% in 2025 and 2.61% in 2026. The five-year was at 2.70%, the 10-year was at 2.94% and the 30-year yield was at 3.85% at 4 p.m.
Bloomberg BVAL was unchanged: 2.55% in 2025 and 2.61% in 2026. The five-year at 2.71%, the 10-year at 2.95% and the 30-year at 3.88% at 4 p.m.
Treasuries were narrowly mixed.
The two-year UST was yielding 4.275% (-2), the three-year was at 4.302% (-1), the five-year at 4.342% (-1), the 10-year at 4.504% (+1), the 20-year at 4.768% (+2) and the 30-year at 4.719% (+3) at 4 p.m.
Primary to come
The
Ohio (Aaa/AAA/AAA/) is set to price Tuesday $810.805 million of higher education GOs, consisting of $350 million of Series 2025A bonds, serials 2026-2045, and $460.805 million of Series 2025B refunding bonds, serials 2025-2035. Jefferies.
The Salt River Project Agricultural Improvement and Power District (Aa1/AA+/NR/NR/) Is set to price Tuesday $637.695 million of Salt River Project electric system revenue bonds, 2025 Series B. J.P. Morgan.
Wisconsin (Aa1/AA+/NR/AAA/) is set to price Tuesday $483.17 million GO refunding bonds, consisting of $339.07 million of Series 3 bonds and $144.1 million of forward-delivery Series 1 bonds. Morgan Stanley.
The
The Arlington Independent School District (Aaa/AAA//) is set to price Tuesday $324.23 million of PSF-insured unlimited tax school building and refunding bonds, serials 2026-2045, term 2050. Siebert Williams Shank.
Denver Public Schools (Aa2/AA+//) is set to price Wednesday $310.15 million of Colorado State Intercept Program-insured GOs, Series 2025C, serials 2046-2049. Stifel.
The Humble Independent School District (Aaa/AAA//) is set to price $270.35 million of PSF-insured unlimited tax school building and refunding bonds. Wells Fargo.
The Maryland Department of Housing and Community Development (Aa1/NR/AA+/NR/) is set to price Tuesday $250 million of social residential revenue bonds, consisting of $75.975 million of non-AMT Series A bonds and $174.025 million of taxable Series B bonds. J.P. Morgan.
The Ohio Housing Finance Agency (Aaa/NR/NR/NR/) is set to price Tuesday $225 million of non-AMT social Mortgage-Backed Securities Program residential mortgage revenue bonds, 2025 Series A. J.P. Morgan.
The University of Washington (Aa1/AA+/NR/NR/) is set to price Tuesday $211.795 million of general revenue and refunding bonds, Series 2025A, serials 2026-2045. Goldman Sachs.
The Tolleson Union High School District No. 214 (AAA/AA//) is set to price Thursday $114.93 million of Projects of 2023 and 2024 school improvement bonds, serials 2026-2028, 2031-2041. Stifel.
The New Mexico Finance Authority (Aa1/AAA//) is set to price Tuesday $100.995 million of senior lien public project revolving fund revenue bonds, consisting of $76.77 million of Series A-1, serials 2025-2047, term 2049, and $24.225 million of Series A-2, serials 2025-2034. Stifel.
Competitive
The Tarrant Regional Water District, Texas, (/AAA/AAA/) is set to sell $422.85 million of water transmission facilities contract revenue bonds at 11:15 a.m. Eastern Tuesday.
Danbury, Connecticut, is set to sell $155.25 million of GO bond anticipation notes at 11 a.m. Thursday.
The Cherokee County School District, Georgia, (Aa1/AA//) is set to sell $100 million of GOs at 10:30 a.m. Thursday.
