Municipals were weaker Tuesday as several large triple-A new-issues saw wider spreads to triple-A scales in the primary market, while U.S. Treasury yields rose and equities faced more losses as markets reacted to uncertainty over tariffs and geopolitical risks.
The two-year municipal to UST ratio Tuesday was at 64%, the five-year at 67%, the 10-year at 69% and the 30-year at 88%, according to Municipal Market Data's 3 p.m. EST read. ICE Data Services had the two-year at 65% the five-year at 67%, the 10-year at 70% and the 30-year at 90% at 4 p.m.
"Market volatility has been extremely high, and given the general distaste for uncertainty, the ever-shifting narrative regarding President [Donald] Trump's tariff policies is throwing fuel on the fire of unpredictability regarding the next shoe to drop," said Chris Brigati, managing director and chief investment officer at SWBC.
"Geopolitical developments, including the war in Ukraine and overseas economic disruptions, such as the fiscal about-face from Germany announcing a 500 billion Euro special investment fund, have contributed to the state-side volatility," he added.
On top of the day-to-day volatility, Brigati said as the April 15 tax deadline approaches, munis are expected to cheapen and ratios to rise.
"Tax season may be running a bit early this year; March has begun with a substantial net redemption trend among the largest municipal [exchange-traded funds], many of which are effectively employed as cash alternative allocations," said Matt Fabian, a partner at Municipal Market Analytics, Inc.
With last week's action, muni funds have seen NAVs erase February gains, and high-yield funds are showing a "larger correction," he said.
"What has happened to yields may not be enough to recapture a strong buying interest from a justifiably wary retail investor who faces realistic recession and/or stagflation headlines," Fabian said.
Elsewhere, "continuous outsized supply may challenge the municipal market for the foreseeable future," said Anders S. Persson, Nuveen's chief investment officer for global fixed income, and Daniel J. Close, Nuveen's head of municipals.
The market, though, remains "fundamentally sound," mostly due to increased demand, they said.
However, supply/demand factors will likely shift with 30-day Bond Buyer visible supply at $11.8 billion and "the lightest redemption period altering buy-side activity over the next several weeks," Brigati noted.
Negotiated deals had difficulty getting priced last week, he said. Furthermore, he said, "traders indicated that bid/offer spreads widened, and secondary activity was notably slower."
"Rate volatility, lower absolute yields and diminished reinvestment dollars were likely all contributing factors to the more muted market activity," Brigati said.
In the primary market Tuesday, Wells Fargo held a one-day retail order of the New York City Transitional Finance Authority's (Aa1/AAA/AAA/) $1.5 billion of future tax secured tax-exempt subordinate bonds, Fiscal 2025 Series H, Subseries H-1, with 5s of 11/2026 at 2.65%, 5s of 2030 at 2.93%, 5s of 2035 at 3.31%, 5s of 2040 at 3.67%, 5.25s of 2045 at 4.13%, 5s of 2050 at 4.38% and 4.375s of 2052 at 4.52%, callable 5/1/2035.
RBC Capital Markets preliminarily priced for Ohio (Aaa/AAA/AAA/) $500 million of GOs. The first tranche, $300 million of common schools GOs, Series 2025A, saw 5s of 6/2026 at 2.57%, 5s of 2030 at 2.79%, 5s of 2035 at 3.11%, 5s of 2040 at 3.44% and 5s of 2044 at 3.87%, callable 6/15/2035.
The second tranche, $200 million of infrastructure improvement GOs, Series 2025A, saw 5s of 6/2026 at 2.57%, 5s of 2030 at 2.79%, 5s of 2035 at 3.10%, 5s of 2040 at 3.44% and 5s of 2044 at 3.87%, callable 3/1/2035.
Barclays priced for the Massachusetts Development Finance Agency (Aa3/AA-/NR/NR/) $372.66 million of Boston College issue revenue refunding bonds, Series W, with 5s of 7/2026 at 2.54%, 5s of 2030 at 2.73%, 5s of 2035 at 3.11%, 5s of 2040 at 3.47%, 5s of 2040 at 3.47%, 5s of 2053 at 4.28%, 5s of 2055 at 4.32% and 4.25s of 2055 at 4.49%, callable 7/1/2035.
Loop Capital Markets priced for the New York City Housing Development Corp. (Aa2/AA+//) $242.82 million of sustainable development multi-family housing revenue bonds. The first tranche, $135.095 million of Series A-1, saw all bonds price at par: 3.3s of 11/2030, 3.75s of 5/2035, 3.8s of 11/2035, 4s of 10/2037, 4.15s 11/2040, 4.6s of 11/2045, 4.75s of 11/2050, 4.8s of 11/2055, 4.85s of 11/2060 and 4.85s of 11/2064, callable 5/1/2033.
The second tranche, $107.725 million of Series A-2, saw 3.25s of 11/2064 with a mandatory tender of 7/2/2029 price at par, callable 7/1/2028.
Jefferies priced for Wisconsin (NR/AAA/NR/AAA/) $144.1 million of transportation revenue refunding bonds, 2025 Series 1, with 5s of 7/2026 at 2.58%, 5s of 2030 at 2.79%, 5s of 2035 at 3.10%, 5s of 2040 at 3.46% and 5s of 2041 at 3.57%, callable 7/1/2035.
In the competitive market, Illinois (/A/A+/AA+/) sold $725 million of junior obligation Build Illinois Bonds in three series.
The state sold $276 million of Series A of March 2025 bonds to RBC Capital Markets, with 5s of 6/2026 at 2.87%, 5s of 2030 at 3.07% and 5s of 2035 at 3.45%, noncall.
The state also sold $231 million of Series C of March 2025 bonds to BofA Securities, with 5s of 6/2041 at 3.95% and 5s of 2045 at 4.35%, callable 6/15/2035.
Illinois sold $218 million of Series C of March 2025 bonds to Morgan Stanley, with 5s of 6/2036 at 3.50% and 5s of 2040 at 3.79%, callable 6/15/2035,
Baltimore County (Aaa/AAA/AAA/) sold $179 million of GO metropolitan district bonds (86th Issue) to J.P. Morgan, with 5s of 3/2026 at 2.58%, 5s of 2030 at 2.76%, 5s of 2035 at 3.06%, 5s of 2040 at 3.41%, 5s of 2045 at 3.97%, 5s of 2049 at 4.14% and 5s of 2055 at 4.21%, callable 3/1/2035.
The county also sold $168 million of GO consolidated public improvement bonds to J.P. Morgan, with 5s of 3/2027 at 2.59%, 5s of 2030 at 2.78%, 5s of 2035 at 3.07%, 5s of 2040 at 3.42% and 5s of 2045 at 3.98%, callable 3/1/2035.
Additionally, Baltimore County (Aa1/AA+/AA+/) sold $125 million of Equipment Acquisition Program certificates of participation to J.P. Morgan, with 5s of 3/2026 at 2.64%, 5s of 2030 at 2.85% and 5s of 2035 at 3.17%, noncall.
AAA scales
MMD's scale was cut up to two basis points: The one-year was at 2.52% (unch) and 2.53% (unch) in two years. The five-year was at 2.69% (unch), the 10-year at 2.96% (unch) and the 30-year at 4.07% (+2) at 3 p.m.
The ICE AAA yield curve saw large cuts out long: 2.59% (+1) in 2026 and 2.56% (+1) in 2027. The five-year was at 2.69% (+1), the 10-year was at 2.97% (+4) and the 30-year was at 4.10% (+17) at 4 p.m.
The S&P Global Market Intelligence municipal curve was unchanged: The one-year was at 2.56% (unch) in 2025 and 2.57% (unch) in 2026. The five-year was at 2.66% (unch), the 10-year was at 2.96% (unch) and the 30-year yield was at 3.94% (unch) at 4 p.m.
Bloomberg BVAL was cut up to two basis points: 2.47% (unch) in 2025 and 2.54% (unch) in 2026. The five-year at 2.66% (unch), the 10-year at 2.93% (+1) and the 30-year at 3.98% (+2) at 4 p.m.
Treasuries were weaker.
The two-year UST was yielding 3.936% (+5), the three-year was at 3.94% (+5), the five-year at 4.032% (+6), the 10-year at 4.281% (+7), the 20-year at 4.631% (+5) and the 30-year at 4.594% (+5) near the close.
Primary to come
The Black Belt Energy Gas District (Baa1/NR/NR/NR/) is set to price $913.95 million of gas project revenue bonds, 2025 Series B. Goldman Sachs.
The Board of Regents of the University of Texas System (Aaa/AAA/AAA/) is set to price Thursday $650 million of permanent university fund bonds, Series 2025A. Jefferies.
The Stamford Housing Authority, Connecticut, is set to price Wednesday $347.665 million of Mozaic Concierge Living Project revenue bonds, consisting of $155.996 million of Series A, $29.615 million of Series B, $61.45 million of Series C, $98.89 million of Series D and $1.755 million of Series E. HJ Sims.
The Public Finance Authority is set to price Wednesday $102.33 million of KSU Bixby Real Estate Foundation Project student housing revenue bonds, consisting of $55.43 million of Series 2025A (Baa1///), serials 2025-2040, terms 2045, 2050, 2055; $27.245 million of Series 2025B (Baa2///), serials 2030, 2035, 2045, 2055; and $19.655 million of Series 2025C (Ba1///), serials 2035, 2045, 2055. Raymond James.
Competitive
The Kansas Development Finance Authority is set to sell $167.15 million of tax-exempt and taxable athletics facilities revenue bonds, at 10:30 a.m. Thursday.
Mercer County, New Jersey, is set to sell $139.91 million of bond anticipation notes, Series 2025A, at 11 a.m. Thursday.
