Municipals were steady to slightly weaker, while U.S. Treasury yields rose and equities ended up.
The two-year municipal to UST ratio Wednesday was at 64%, the five-year at 65%, the 10-year at 67% and the 30-year at 87%, according to Municipal Market Data's 3 p.m. EST read. ICE Data Services had the two-year at 65%, the five-year at 66%, the 10-year at 68% and the 30-year at 85% at 4 p.m.
With munis seeing gains of 0.99% in February, it was a "strong month," said Daryl Clements, a portfolio manager at AllianceBernstein.
This month, net supply is expected to be $7 billion, "meaning that issuance is likely to exceed the amount of coupon payments and redemptions, creating a potential headwind for the market," he said.
There may also be some selling pressure as investors pull cash during tax season, he said.
However, this seasonality could be "mitigated" if inflows continue to be strong, according to Clements.
Demand for tax-exempt income has been — and will continue to remain — healthy, with investors adding $1.35 billion to the muni market last week, according to the Investment Company Institute.
Investors have added around $6.178 billion year-to-date to the muni market, per ICI.
That said, supply has been "relatively strong," Clements said.
Issuance remains heavy this week, but while it's elevated, the muni market is "structurally undersupplied," meaning if 2024's record level of $500 billion-plus of issuance was doubled, the market could still digest it quite well, said Wesly Pate, a senior portfolio manager at Income Research + Management.
"That expansion of supply would start to bring in other buyers potentially," he said.
Some market participants believe the muni market needs $750 billion to $1 trillion annually to address infrastructure issues.
"We've shifted infrastructure spending more so to the federal level," Pate said. "As a result, we don't issue enough debt in the market. So even if we were to grow this market substantially, you could not overwhelm the market."
There would be short "blips" and periods where the excess supply would weigh on ratios a little bit, "but that's sort of the plumbing of the market as it works itself through," Pate said.
There would also be very similar levels of valuations around today, he noted.
In the primary market Wednesday, Ramirez priced for institutions New York City's (Aa2/AA/AA/AA+/) $1.414 billion of GOs, with small cuts from Tuesday's retail pricing. The first tranche, $500 million Series E bonds, saw 5s of 8/2026 at 2.68% (+1), 5s of 2030 at 2.88% (+3), 5s of 2035 at 3.20% (+1), 5s of 2040 at 3.58% (+2), 5s of 2045 at 4.06% (-1), 5.25s of 2050 at 4.21% (+1) and 4.25s of 2055 at 4.43%, callable 2/1/2035.
The second tranche, $913.73 million of refunding Series F bonds, saw 5s of 8/2025 at 2.72% (+5), 5s of 2030 at 2.88% (+3), 5s of 2035 at 3.20% (+1), 5s of 2040 at 3.58% (+2) and 5s of 2043 at 3.91% (+1), callable 2/1/2035.
BofA Securities priced for institutions Kentucky State Property and Buildings Commission's (Aa3/NR/AA-/NR/) $900.055 million of Project No. 132 revenue bonds, with yields bumped up to six basis points from Tuesday's retail pricing. The first tranche, $771.79 million of Series 2025A bonds, saw 5s of 4/2026 at 2.68% (-6), 5s of 2030 at 2.86% (-5), 5s of 2035 at 3.21% (-2), 5s of 2040 at 3.63% (-2), 5s of 2045 at 4.10% (-6) and 4.125s of 2045 at 4.34% (-2), callable 4/1/2035.
The second tranche, $128.265 million of Series 2025B refunding bonds, saw 5s of 4/2027 at 2.77% (-4), 5s of 2030 at 2.92% (-5), 5s of 2035 at 3.26% (-3) and 5s of 2036 at 3.34% (unch), noncall.
Goldman Sachs priced for the California Community Choice Financing Agency $493.79 million of green clean energy project revenue bonds, Series 2025A, as 5s of 1/2056 with a mandatory tender of 5/1/2035 at 4.22%, callable 2/1/2035.
Goldman Sachs priced for the Massachusetts Development Finance Agency $434.08 million of Harvard University revenue bonds. The first tranche, $217.04 million of Series A-1, saw 5s of 5/2055 with a mandatory tender of 5/13/2032 price at 2.83%, noncall.
The second tranche, $217.04 million of Series A-2, saw 5s of 5/2055 with a mandatory tender of 11/15/2035 price at 3.04%, noncall.
Wells Fargo priced for the Pennsylvania Housing Finance Agency (Aa1/AA+//) $326.92 million single-family mortgage revenue bonds. The first tranche, $262.94 million Series 148A non-AMT social bonds, saw 5s of 4/2026 at 2.95%, 5s of 4/2030 at 3.25%, 5s of 10/2030 at 3.30%, 3.75s of 4/2035 at par, 3.8s of 10/2035 at par, 4.2s of 10/2040 at par, 4.625s of 10/2040 at par, 4.75s of 10/2055 at par and 4.8s of 10/2055 at par, callable 10/1/2033.
Pricing details for the second tranche, $63.98 million of Series 148B taxable bonds, were unavailable as of 3:15 p.m.
In the competitive market,
Mobile, Alabama, (Aa2/AA//) sold $222.51 million GO warrants, Series 2025A, to J.P. Morgan, with 5s of 2/2031 at 2.75%, 5s of 2035 at 3.01%, 5s of 2040 at 3.40% and 5s of 2045 at 3.97%, callable 2/15/2035.
AAA scales
MMD's scale was little changed: The one-year was at 2.54% (unch) and 2.54% (unch) in two years. The five-year was at 2.63% (unch), the 10-year at 2.87% (unch) and the 30-year at 3.96% (+3) at 3 p.m.
The ICE AAA yield curve was cut up to four basis points: 2.55% (unch) in 2026 and 2.55% (unch) in 2027. The five-year was at 2.63% (unch), the 10-year was at 2.88% (+2) and the 30-year was at 3.86% (+3) at 4 p.m.
The S&P Global Market Intelligence municipal curve was little changed: The one-year was at 2.58% (unch) in 2025 and 2.58% (unch) in 2026. The five-year was at 2.64% (unch), the 10-year was at 2.87% (unch) and the 30-year yield was at 3.86% (+2) at 4 p.m.
Bloomberg BVAL was cut up to two basis points out long: 2.49% (unch) in 2025 and 2.55% (unch) in 2026. The five-year at 2.62% (unch), the 10-year at 2.86% (unch) and the 30-year at 3.88% (+2) at 4 p.m.
Treasuries were weaker.
The two-year UST was yielding 3.995% (flat), the three-year was at 4.004% (+2), the five-year at 4.067% (+2), the 10-year at 4.274% (+3), the 20-year at 4.603% (+3) and the 30-year at 4.566% (+3) near the close.
Primary to come
The New York State Housing Finance Agency (Aaa///) plans to price $231 million 160 West 62nd Street housing revenue bonds, consisting of $155 million of Series A1 and $76 million of Series A2. Wells Fargo.
The Houston Independent School District (Aaa/AAA//) plans to price Thursday $186.155 million of PSF-insured limited tax refunding bonds, Series 2025B, serial 2026. RBC Capital Markets.
The California Public Finance Authority plans to price $102.12 million senior living revenue bonds, consisting of $96.775 million of Series A, $2.345 million of Series B and $3 million of Series C. H.J. Sims.
Technology update
ficc.ai, an AI-powered fixed-income pricing platform, received a grant from the Stellar Development Foundation to develop a "blockchain-based pricing oracle" for munis and U.S. Agency mortgage-backed securities, according to a press release.
This initiative will "enhance transparency, efficiency, and accessibility in the fixed-income markets by distributing evaluated fixed income prices on the Stellar blockchain," the release said.
"This partnership represents a significant step toward the future of fixed-income pricing," said Jon Fiebach, ficc.ai CEO, in a statement. "By bringing AI-driven municipal bond and MBS pricing onchain, we are fostering a more open and efficient financial ecosystem, reducing barriers to access, and driving greater market transparency."
ficc.ai's long-term goal is to make bond market data more accessible, reduce reliance on "monopolistic pricing structures" and enable broader market participation, the release said.
