Jessica Lerner

The top two municipal bond insurers wrapped over $42.828 billion in 2025, up slightly from $41.166 billion in 2024, according to LSEG data.

Underwriting spreads rose to $4.30 in 2025 from $4.23 in 2024.

The muni market produced $586.195 billion of debt issuance in 2025, up 14.1% from the previous record of $513.652 billion in 2024, according to LSEG data.

"Unsurprisingly, the market is taking these numbers in stride, with the bond market only slightly higher after a large rally over the last couple of days due to the equity market sell-off," said John Kerschner, global head of securitized products and portfolio manager at Janus Henderson Investors.

Currently, munis are largely operating "in their own world" — ignoring rich valuations and upcoming supply, said Kim Olsan, senior fixed income portfolio manager at NewSquare Capital, in a report.

Muni SMAs now hold an estimated $1.3 trillion in assets under management across around 180 managers, per J.P. Morgan. Meanwhile, ETF muni holdings are at $163.1 billion, up 22.4% year-over-year, as of the third quarter of 2025, according to the latest Federal Reserve data.

"The bond market marked down the odds of rate cuts after the release," said FHN Financial Chief Economist Chris Low. "The fact long yields are still lower than two days ago suggests traders are skeptical of the quality of the employment data but are confident the Fed will use it as a reason to keep rates steady," he said.

The prepaid gas sector, once a small niche sector in the muni market, has grown exponentially over the years, with issuance reaching a record $31.4 billion in 2025.

Tuesday was a particularly heavy day of supply at an estimated $7.5 billion, per J.P. Morgan strategists.

This week's expected elevated $12.6 billion in supply" "coincides with a recent uptick in secondary offerings … and may skim some froth from the market, particularly where spreads have hit one-year tights," said J.P. Morgan strategists led by Peter DeGroot.

The new-issue calendar is led by Washington with $1.3 billion of GOs selling by competitive bid in three series.

Munis enter this year with "strong credit fundamentals, elevated tax-equivalent yields, and a steeper curve that supports duration extension," said James Welch, municipal portfolio manager at Principal Asset Management.

Yields have seen "intermittent volatility from broader macro and geopolitical crosscurrents, keeping sentiment cautious despite relatively muted headline moves," said James Pruskowski, managing director at Hennion & Walsh.

Supply should be "well-received, given strong inflows and the increase in reinvestment capital for the new month," said Chris Brigati, managing director and CIO at SWBC, and Ryan Riffe, senior vice president of capital markets at the firm.

Issuance was $34.308 billion in 471 issues, down 7.2% year-over-year from $36.982 billion across 536 transactions in 2025. However, this was the third-highest monthly figure for January and above the month's 10-year average of $29.699 billion

Munis were largely unchanged this week and tax-exempts continue to be "quite unattractive" at current levels, said Barclays strategists led by Mikhail Foux.

Over the past five years, January has seen a relatively stable market tone, said Jeff Timlin, managing partner and head of municipal bond investing at Sage Advisory.

"Markets are reading this as a strategic pause, not a policy shift," said Gina Bolvin, president of Bolvin Wealth Management Group.

The muni market has rebounded from the technical pressures of the first half of last year — a result of surging issuance — said John Miller, head and CIO of First Eagle's municipal credit team.

The top two municipal bond insurers wrapped over $41.828 billion in 2025, up from $41.166 billion in 2024, data shows.