Jessica Lerner

However, the new-issue calendar may not be "absorbed as easily, given valuations have grown less compelling after this week's performance," said Birch Creek strategists.

The nonfarm payrolls report shows the economy is "hanging in there," though it is slowing, said Jeff MacDonald of Fiduciary Trust International.

This week the market has performed "exceedingly well" with the tailwind of June 1 reinvestment capital, said J.P. Morgan strategists led by Peter DeGroot.

There is still a lot of chaos and uncertainty out there, said Jennifer Johnston, director of municipal bond research at Franklin Templeton.

"We're going to get a lot of price discovery with the big deals, a large number of deals, and then a lot of cash to put to work," said Whitney Fitts of Appleton Partners.

Issuance this week soars to nearly $17 billion, and investors are "bracing for another hefty serving the following week," said Birch Creek strategists.

Primary bond market volume was up 3.6% year-over-year to $49.9 billion, according to LSEG data.

With higher yields and ratios, many participants say investors should be taking advantage of current levels.

Supply has weighed on munis to some extent over the past few weeks, as week after week issuance tops $10 billion, said Jeremy Holtz, a portfolio manager at Income Research + Management.

Muni yields were bumped up to eight basis points, depending on the curve, on Tuesday, but for most of last week, U.S. rates sold off on the heels of passed legislation, said Barclays strategists Mikhail Foux and Grace Cen.

"We're seeing some of the additional instability and other things come into play," said Dan Genter, CEO of Genter Capital Management.

Municipal bond insurers wrapped $7.316 billion in the first quarter of 2025, a 2.6% increase from the $7.132 billion insured in the first quarter of 2024, according to LSEG data.

"Light demand" for Wednesday's 20-year Treasury bond auction "propelled yields to the nosebleeds and equities to the basement," said José Torres, senior economist at Interactive Brokers.

The "risk to the tax exemption appears to have dropped sharply as of last week ... taking with it the hypothetical risk of a supply surge ahead of any end-date for borrowers' exemption access," said Matt Fabian, a partner at Municipal Market Analytics.

"Munis are no longer moving on headlines; they're reacting to rates and supply," which is playing out again Monday after a choppy March and April, said James Pruskowski, chief investment officer at 16Rock Asset Management.

Municipals were cut up four basis points, depending on the curve, through noon.

Issuance for the week of May 19 is estimated at $11.667 billion.

At a Bond Buyer conference in Atlanta, industry leaders talked about tariff turmoil, the tax-exemption, weather resiliency, infrastructure and more. 

For most investors, partnership matters, said Jamie Doffermyre, head of public finance syndicate and origination at Truist Securities.

While April was a challenging month for muni performance, this summer will be a more supportive environment, said Mark Paris, chief investment officer and head of municipals at Invesco.