Municipals were weaker to start the week, as U.S. Treasury yields rose slightly and equities were mixed near the close.
Muni yields rose up to nine basis points, depending on the scale, while UST yields rose up to three basis points.
"While we acknowledge that the market tone is weaker [Monday], we are generally constructive regarding valuations and expect this week's supply to be absorbed fairly well after last week's giveback of the richening witnessed over prior weeks," said Vikram Rai, head of municipal markets strategy at Wells Fargo.
This week's issuance remains robust at $12-plus billion, the fourth week of supply over $10 billion. Bond Buyer 30-day supply sits at $17.9 billion.
In the primary market Monday, BofA Securities held a one-day retail order for 741.62 million of tax-exempt 2024 GO refunding bonds from the Los Angeles Community College District (Aaa/AA+//), with 5s of 8/2024 at 3.25%, 5s of 2029 at 2.95%, 5s of 2034 at 2.97%, 5s of 2039 at 3.23% and 5s of 2040 at 3.33%, callable 8/1/2034.
As the midpoint of May passes, muni returns have fallen slightly as the asset class is now posting gains of 1.02% — with the front end returning 0.47% and long end returning 1.93% — versus the prior week's return of 1.08%, said Jason Wong, vice president of municipals at AmeriVet Securities.
"With the inflation numbers and weak retail sales data pointing to a slowing economy, muni markets are now starting to price in a Fed cut in September which should fuel a strong rally going into the summer," he said.
Muni yields rose slightly last week with 10-year notes ending the week at 2.67%, rising 0.16 basis points, Wong said.
With rising yields, munis underperformed USTs, allowing muni-UST ratios to move higher, said Pat Luby, head of municipal strategy at CreditSights.
The two-year muni-to-Treasury ratio Monday was at 65%, the three-year at 65%, the five-year at 64%, the 10-year at 64% 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 64%, the three-year at 64%, the five-year at 64%, the 10-year at 64% and the 30-year at 82% at 3:30 p.m.
The 10- and 30-year ratios "are closing just above their respective 90-day averages but were still well below their longer-term averages," he said.
Muni mutual funds saw outflows last week after three straight weeks of inflows. Investors pulled
The outflows were driven mostly by $639 million of outflows from open-end funds versus inflows of $91 million into
"However, we do not believe this print included the impact of the rate rally witnessed last week and we remain cautiously optimistic that fund flows will turn positive in the wake of the soft retail and CPI numbers, which could lead to rates drifting lower," he said.
AAA scales
Refinitiv MMD's scale was cut up eight basis points: The one-year was at 3.23% (unch) and 3.17% (+8) in two years. The five-year was at 2.86% (+8), the 10-year at 2.85% (+8) and the 30-year at 3.79% (+3) at 3 p.m.
The ICE AAA yield curve was cut one to six basis points: 3.25% (+2) in 2025 and 3.11% (+1) in 2026. The five-year was at 2.86% (+6), the 10-year was at 2.83% (+6) and the 30-year was at 3.76% (+1) at 3:30 p.m.
The S&P Global Market Intelligence municipal curve was cut up to nine basis points: The one-year was at 3.25% (unch) in 2025 and 3.15% (+8) in 2026. The five-year was at 2.84% (+8), the 10-year was at 2.80% (+9) and the 30-year yield was at 3.78% (+4), according to a 3 p.m. read.
Bloomberg BVAL was cut one to five basis points: 3.31% (+1) in 2025 and 3.13% (+2) in 2026. The five-year at 2.73% (+5), the 10-year at 2.70% (+5) and the 30-year at 3.80% (+2) at 3:30 p.m.
Treasuries were slightly weaker.
The two-year UST was yielding 4.845% (+2), the three-year was at 4.631% (+3), the five-year at 4.465% (+2), the 10-year at 4.442% (+1), the 20-year at 4.680% (+2) and the 30-year at 4.580% (+2) at 3:45 p.m.
Primary to come
Harris County, Texas, (Aa2//AA/) is set to price Tuesday $950 million of toll road first lien revenue and refunding bonds, Series 2024A, serials 2025-2050. Raymond James.
The Burbank-Glendale-Pasadena Airport Authority (A2/A/A-/) is set to price Wednesday $736.11 million of airport senior revenue bonds, consisting of $32.305 million of non-AMT bonds, Series 2024A, serial 2054; $649 million of AMT bonds, Series 2024B, serials 2031-2044, terms 2049, 2054; and $54.805 million of taxables, Series 2024C, serials 2028-2031. BofA Securities.
The Texas State University System Board of Regents (Aa2//AA/) is set to price Tuesday $607.9 million of Revenue Financing System revenue and refunding bonds, Series 2024, serials 2025-2044, terms 2049, 2054. Wells Fargo.
The Southern California Public Power Authority (A2///) is set to price next week $588.69 million of Clean Energy Project revenue bonds, Series 2024A. Goldman Sachs.
The authority (Aa2//AA-/) is also set to price Tuesday $186.955 million of Apex Power Project refunding revenue bonds, 2024 Series A. J.P. Morgan.
The California Enterprise Development Authority (Aa3/AA-//) is set to price Wednesday $519.845 million of Riverside County - Mead Valley Wellness Village Project lease revenue bonds, $429.845 million of Series 2024A and $90 million of Series 2024B. Morgan Stanley.
Austin, Texas, (Aa2/AA/AA-/) is set to price Tuesday $455.695 million of water and wastewater system revenue refunding and improvement bonds, Series 2024, serials 2024-2044, terms 2049, 2053. Ramirez.
The Great Lakes Water Authority, Michigan, is set to price Tuesday $385.585 million of sewage disposal system revenue refunding bonds, consisting of $345.435 million of senior lien bonds (Aa3/AA-/AA-/), Series 2024A, serials 2025-2033, and $40.150 million of second lien bonds (A1/A+/A+/), Series 2024B, serials 2025-2029, 2032, 2034-2035. Siebert Williams Shank.
The authority is set to price Tuesday $382.745 million of water supply system revenue refunding bonds, consisting of of $345.75 million of senior lien bonds (Aa3/AA-/AA-/), Series 2024A, serials 2025-2035, 2037, and $35.995 million of second lien bonds (A1/A+/A+/), Series 2024B, serials 2025-2027, 2034, 2036. Siebert Williams Shank.
The Edmonds School District No. 15, Washington, (Aaa///) is set to price Wednesday $289.815 million of unlimited tax GO and refunding bonds, Series 2024. Piper Sandler.
The Illinois Finance Authority (Aa3/AA-//) is set to price Thursday $285.895 million of Endeavor Health Credit Group revenue refunding bonds, Series 2024A. BofA Securities.
The Florida Housing Finance Corp. (Aaa///) is set to price Wednesday $250 million of homeowner mortgage revenue bonds, consisting of $100 million of non-AMT bonds, 2024 Series 3, serials 2025-2036, terms 2039, 2044, 2049, 2054, 2055, and $150 million of taxables, 2024 Series 4, serials 2025-2036, terms 2039, 2044, 2049, 2054, 2055. BofA Securities.
The corporation is also set to price Wednesday $146.64 million of SFP - Tampa I - The Henry Project student housing revenue bonds, consisting of $104.79 million of tax-exempt senior bonds (A-1 //BB+/), Series 2024A-1, terms 2044, 2054, 2059; $13.15 million of taxable senior bonds (A-2 //BB+/), Series 2024A-2, term 2037; and $28.7 million of non-rated tax-exempt subordinate bonds, Series 2024B, serial 2059. RBC Capital Markets.
Corpus Christi, Texas, (/AA-/AA-/) is set to price Thursday $244.765 million of utility system senior lien revenue improvement and refunding bonds, Series 2024, serials 2025-2044, terms 2049, 2054. Ramirez.
The Virginia Electric and Power Company (A2/BBB+//) is set to price Tuesday $242.5 million, consisting of $37.5 million of Series A, term 2035; $100 million of Series B, term 2041 and $105 million of Series C, term 2040. PNC Capital Markets.
The Iowa Finance Authority (Aaa/AAA//) is set to price Tuesday $202.95 million of green State Revolving Fund revenue bonds, Series 2024A. Morgan Stanley.
The Astoria Hospital Facilities Authority, Oregon, (/BBB/BBB+/) is set to price Wednesday $200 million of Columbia Memorial Hospital Project revenue bonds, Series 2024, serials 2030-2044, terms 2049, 2054. BofA Securities.
The Port of Beaumont Navigation District, Texas, is set to price $199.695 million of non-rated Jefferson Gulf Coast Energy Project Dock and Wharf Facility revenue bonds, Series 2024B. Morgan Stanley.
The Wisconsin Housing and Economic Development Authority (Aa2/AA+//) is set to price Tuesday $190 million of non-AMT social home ownership revenue bonds, 2024 Series B, serials 2025-2036, terms 2039, 2044, 2051, 2055. RBC Capital Markets.
Glendale, Arizona, (/AA+/AA/) is set to price Tuesday $169.59 million of senior excise tax revenue and revenue refunding obligations, Series 2024, serials 2026-2038. RBC Capital Markets.
The Trustees of Indiana University (Aaa/AAA//) is set to price Tuesday $102.05 million of Indiana University consolidated revenue bonds, Series 2024A. Goldman Sachs.
The Los Angeles Community College District (Aaa/AA+//) is set to price Tuesday $100.08 million of 2022 Election GOs, consisting $100 million of taxables, serials 2024-2027, and $80,000 million of tax-exempts, serials 2024-2039. BofA Securities.
Ohio (Aa3//AA-/) is set to price Tuesday $100 million of Children's Hospital Medical Center of Akron hospital facilities revenue bonds. Goldman Sachs.
Competitive
Wake County, North Carolina, (Aaa/AAA/AAA/) is set to sell $66.14 million of GO public improvement bonds, Series 2024A, at 11 a.m. Tuesday, and $164.38 million of GO refunding bonds, Series 2024B, at 10:30 a.m. Tuesday.
Fort Worth, Texas, (/AA/AA/) is set to sell $16.55 million of tax notes at 10:30 a.m. Tuesday and $156.315 million of general purpose bonds at 10:30 a.m. Tuesday.
Loudoun County, Virginia, (Aaa/AAA/AAA/) is set to sell $201.655 million of GO public improvement bonds, Series 2024A, at 11:15 a.m. Tuesday.
The Virginia Public Building Authority is set to sell $220.66 million of public facilities revenue bonds, Series 2024A, at 10:15 a.m. Tuesday; $135.13 million of public facilities revenue refunding bonds, Series 2024B, at 10:45 a.m. Tuesday; and $30.12 million of taxable public facilities revenue bonds, Series 2024C, at 11:15 a.m. Tuesday.
Clark County, Nevada, is set to sell $206.895 million of highway revenue improvement and refunding bonds, Series 2024, at 11:30 a.m. Wednesday.
Fort Worth, Texas, is set to sell $150 million of water and sewer system revenue bonds at 10:30 a.m. Wednesday.
