Finance

The muni market also faces an elevated new-issue calendar, which may put additional pressure on muni yields. Bond Buyer 30-day visible supply sits at $17.57 billion.

"It is the first step but that doesn't mean there's a second step," said John Bagley, the MSRB's chief market structure officer.

The billion-dollar deal will be the first bonds backed by the tax since it was created in 2019.

"'The market environment will likely become a bit more difficult in the coming week, as supply will jump to its highest level in weeks, while dealers are heavier than average," said Mikhail Foux, head of municipal research and strategy at Barclays.

The management team sees opportunity in pockets that other investors avoid, like American Dream, Midwestern private colleges and senior living facilities.

The rating agency said the district's strong management helped boost its ratings ahead of an $806 million bond issuance slated for Jan. 22.

Analysts cited growth in the county's reserves, conservative budgeting and strong sales tax revenue as the county prepares to sell GO bonds.

Sizable deals for next week include $1.3 billion of real estate transfer tax revenue bonds from the Triborough Bridge and Tunnel Authority and $996.335 million of second series revenue bonds from the San Francisco International Airport.

The Federal Reserve will be more cautious and slow rate cuts going forward, according to minutes of the December Federal Open Market Committee meeting, released Wednesday.

Pressing issues like the shifts in banking teams at various firms following Citi's exit from the business to major ratings changes make the ranking.

"Further Treasury rate volatility or distractions from more favorable alternatives could at the very least moderate money invested into the municipal bond market," DWS strategists said. However, "these dynamics could create periods of opportunity to buy tax-exempt bonds at attractive yields in 2025."

"These opportunities will surface periodically throughout the year against heavy supply and the increasingly uncertain path for the Fed, evolving fiscal policy, and volatile Treasury market backdrop," said J.P. Morgan strategists.

Heavy redemptions and coupon payments this month should help "stabilize" the market, said Barclays strategist Mikhail Foux.

BRIDGE Housing Corp. is the first to publicly offer tax-exempt bonds to finance construction of a new development, a 224-unit project in Portland, Oregon.

Investors pulled more from municipal bond mutual funds in the final reporting week of 2024, but high-yield reverted to inflows to close out the year, adding to the sector's outperformance overall.

Westchester County, New York, plans to issue roughly $189 million in general obligation bonds, with Fitch Ratings giving the debt its top rating of AAA.

While municipals have outperformed USTs on the whole in 2024, they will close December with losses. How taxables perform in early 2025 coupled with macroeconomic and Washington policy uncertainty have municipal market participants on edge for what lies ahead.

Both IG and HY indices will likely end this year richer versus USTs and their benchmarks, "leaving very little cushion to absorb rate volatility," said Barclays strategist Mikhail Foux.

San Francisco's "tepid" recovery from the pandemic was cited by Fitch.

While Friday's muni session was muted, the damage of a volatile UST market, paired with low new-issue supply and year-end positioning, has weighed on the asset class in December.