Municipals were weaker Tuesday with the largest losses out long while U.S. Treasuries saw narrow gains on the day and equities ended up.
Triple-A yields rose by up to five basis points, depending on the scale, while USTs saw yields flat or lower by a basis point or two.
The two-year muni-to-Treasury ratio Tuesday was at 60%, the three-year at 61%, the five-year at 62%, the 10-year at 66% and the 30-year at 83%, according to Refinitiv Municipal Market Data's 3 p.m. EST read. ICE Data Services had the two-year at 62%, the three-year at 62%, the five-year at 62%, the 10-year at 68% and the 30-year at 84% at 4 p.m.
This week is a heavy week for data, noted Cooper Howard, a fixed income strategist at Charles Schwab.
Howard expects the trend in inflation, via the release of the Consumer Price Index on Thursday and the Produce Price Index to come Friday, will "continue to normalize and come down to the Fed's 2% targets."
The Federal Open Market Committee meeting minutes are released Wednesday, giving further clarity, Howard noted.
"There will be 20 instances of Fed speakers this week so that could have the potential for some surprises," he said.
For the muni market, tax-exempt munis have outperformed of late, "fully normalizing ratios from their early September highs," said Tripp Kaiser, managing director at Municipal Market Analytics, Inc.
However, the outperformance has been mostly on muni market "steadiness," where, regardless of
Inflows into muni mutual funds continued last week, with LSEG Lipper reporting positive fund flows of $1.88 billion, the largest weekly figure year-to-date.
Long funds saw inflows of $1.6 billion, and high-yield added $602 million, but intermediates only added $143 million, while short funds saw outflows of $445 million — consistent with 2024's activity, Kaiser said, citing LSEG data.
And with positive intermediate exchange-traded flows, led by MUB and VTEB, "investors have been content with ETFs and SMAs for intermediate municipal exposure," he said.
High-yield and long mutual funds have seen a combined $30 billion of inflows year-to-date, contributing to HY's outperformance compared to investment grade across the curve, Kaiser said.
This has helped "active fund managers outperform their respective benchmarks by the most since at least 2015," he said.
Supply is slightly lower this week at nearly $10 billion but not by much, he said, with the pace of supply suggesting $500 billion of issuance for the year could still happen.
During the last two election cycles, issuance rose above average in September and October but fell below average in November and December, Kaiser said.
"So elections, especially those involving President Trump, have a history of disrupting seasonal issuance patterns," he said.
In the primary market Tuesday, BofA Securities took indications of interest on $1.5 billion of taxable GOs for
Siebert Williams Shank held a one-day retail order for $935 million of GOs from Connecticut (Aa3/AA-/AA-/AA+/). The first tranche, $560 million of Series F bonds, saw 5s of 11/2025 at 2.74%, 5s of 2029 at 2.54%, 5s of 2034 at 2.91% and 5s of 2038 at 3.14%, callable 11/15/2034.
The second tranche, $240 million of social Series G bonds, saw 5s of 11/2039 at 3.22% and 5s of 2044 at 3.61%, callable 11/15/2034.
The third tranche, $135 million of refunding Series H bonds, saw 5s of 11/2025 at 2.74%, 5s of 2029 at 2.54% and 5s of 2034 at 2.91%, callable 11/15/2034.
BofA Securities priced for the Maryland Stadium Authority (Aa2/AA//)
BofA Securities priced for the Hampton Roads Transportation Accountability Commission (Aa1/AA//) $151.595 million of Hampton Roads Transportation Fund senior lien revenue bonds, Series 2024A, with 5s of 7/2030 at 2.53%, 5s of 2034 at 2.81%, 5s of 2039 at 3.13%, 5s of 2044 at 3.57%, 5s of 2049 at 3.83%, 5s of 2054 at 3.91%, 5.25s of 2059 at 3.95% and 5.25s of 2064 at 4.00%, callable 7/1/2034.
Wells Fargo priced for the Mississippi Home Corp. (Aaa///) $125.815 million of single-family mortgage revenue bonds. The first tranche, $96.835 million of non-AMT bonds, Series 2024E, saw all bonds price at par — 3.3s of 6/2029, 3.3s of 12/2029, 3.75s of 6/2034, 3.8s of 12/2034, 4.05s of 12/2039, 4.45s of 12/2044, 4.6s of 12/2049 and 4.65s of 12/2054 — except for 7.5s of 6/2044 at 3.97% and 7.5s of 6/2049 at 4.10%, callable 12/1/2033.
The second tranche, $28.98 million of taxables, Series 2024F, saw all bonds price at par — 4.517s of 6/2025 and 4.40s of 6/2029 — except for 6s of 12/2054 at 5.054%, callable 12/1/2033.
BofA Securities priced for the Metropolitan Knoxville Airport Authority (A3/A//) $109.255 million of airport revenue bonds. The first tranche, $698.015 million of non-AMT bonds, Series 2024A, saw 5s of 6/2028 at 2.67%, 5s of 2029 at 2.67%, 5s of 2034 at 3.03%, 5s of 2039 at 3.36%, 5s of 2044 at 3.79%, 5.25s of 2049 at 3.95% and 5.25s of 2054 at 4.06%, callable 6/1/2034.
The second tranche, $41.24 million of taxables, Series 2024B, saw all bonds price at par: 4.425s of 6/2027, 4.555s of 2029, 4.929s of 2034, 5.229s of 2039, 5.215s of 2044 and 5.315s of 2054, callable 6/1/2034.
Barclays priced for Washington State University (Aa3/A+//) $106.065 million of general revenue refunding delayed delivery bonds, with 5s of 4/2027 at 2.73%, 5s of 2029 at 2.79%, 5s of 2034 at 3.13%, 5s of 2039 at 3.47% and 5s of 2040 at 3.57%, callable 4/1/2035.
In the competitive market, the New York State Thruway Authority (Aa3/A+//) sold $521.75 million of general revenue refunding bonds, Series Q, with 5s of 1/2026 at 2.67%, 5s of 2029 at 2.57% and 5s of 2032 at 2.76%, noncall.
AAA scales
Refinitiv MMD's scale was cut one to five basis points: The one-year was at 2.67% (+3) and 2.43% (+3) in two years. The five-year was at 2.40% (+2), the 10-year at 2.72% (+5) and the 30-year at 3.65% (+5) at 3 p.m.
The ICE AAA yield curve was cut one to four basis points: 2.71% (+1) in 2025 and 2.46% (+2) in 2026. The five-year was at 2.41% (+2), the 10-year was at 2.71% (+4) and the 30-year was at 3.59% (+3) at 4 p.m.
The S&P Global Market Intelligence municipal curve saw cuts: The one-year was at 2.72% (+5) in 2025 and 2.45% (+5) in 2026. The five-year was at 2.39% (+3), the 10-year was at 2.71% (+6) and the 30-year yield was at 3.61% (+5) at 3 p.m.
Bloomberg BVAL was cut two to three basis points: 2.70% (+2) in 2025 and 2.45% (+2) in 2026. The five-year at 2.41% (+2), the 10-year at 2.67% (+4) and the 30-year at 3.60% (+3) at 4 p.m.
Treasuries made gains on the bonds inside 10 years.
The two-year UST was yielding 3.969% (-4), the three-year was at 3.88% (-2), the five-year at 3.857% (-1), the 10-year at 4.026% (flat), the 20-year at 4.374% (flat) and the 30-year at 4.309% (flat) at the close.
Primary to come
The New York State Housing Finance Agency (Aa1///) is set to price Wednesday $259.99 million of state personal income tax sustainability revenue bonds, consisting of $7.975 million of 2024 Series A-1 and $185.015 million of 2024 Series A-2. Jefferies.
The Cabarrus County Development Corp., North Carolina, (Aa1/AA+/AA+/AA+) is set to price Thursday $238.305 million of limited obligation refunding bonds, serials 2025-2044. BofA Securities.
The Aldine Independent School District, Texas, (Aaa/AAA//) is set to price Wednesday $183.74 million of PSF-insured unlimited tax school building and refunding bonds, Series 2024B. Cabrera Capital Markets.
The Ohio Higher Educational Facility Commission (Baa1//A-/) is set to price Wednesday $180.935 million of Xavier University 2024 Project higher educational facility revenue refunding bonds, serials 2025-2042, terms 2049, 2054. RBC Capital Markets.
Orlando, Florida, (/AAA/AAA/) is set to price Wednesday $149.27 million of water reclamation system revenue bonds, consisting of $132.18 million of improvement bonds, Series 2024A, serials 2025-2054; and $17.09 million of refunding bonds, Series 2024B, serials 2025-2032. BofA Securities.
The Arizona Board of Regents (Aa3/A+//) is set to price Wednesday
Competitive
Clark County School District, Nevada, (A1/AA-//) is set to sell $400 million of limited tax general obligation bonds at 11:30 a.m. eastern Thursday.
