Markets News from Bond Buyer

"You would think global instability leads to flight for quality, but you also have the inflationary pressures that come with higher oil prices. I would say the inflationary pressures have been winning, and that's why you're seeing Treasury and muni rates move higher," said Keith Richard, head of public finance at Siebert Williams Shank.

The AA-minus-rated bonds come to market as the hospital sector continues to navigate through rising expenses and other challenges.

"We are in interesting times as the market must now balance these robust technicals against a backdrop of geopolitical tension in the Middle East and the nomination of Kevin Warsh, whose hawkish reputation is already being weighed by participants," said Jason Wong, vice president of municipals at AmeriVet Securities.

"The secondary infrastructure demands [of data centers] will increasingly flow through to municipal balance sheets, driving incremental issuance across multiple sectors," said J.P. Morgan strategists.

While it's unclear how long the war in the Middle East will drag on, once President Donald Trump announces an end to the war, things could change "on a dime," as happened with the tariff-induced volatility in April 2025, said Peter Block, managing director of credit strategy at Ramirez.

Findings from The Bond Buyer's 2026 Predictions report predict funding crises in these market sectors will be a top worry for municipal finance pros.

"Looking at where oil was and the potential for disruption, and this being tax season and issuers having to pull deals, there's no reason why yields wouldn't have been higher," said Matt Fabian, president of Municipal Market Analytics.

Some states and local governments "went on spending sprees" with pandemic funds and "got ratings upgrades that didn't have a lot to do with fiscal management," said an investor.

With front-end rates off so much Thursday morning, "liquidity providers backed off noticeably in the morning in terms of bid with offers slow to follow," said Matt Smith, founder and CEO of Spline Data, noting it was likely a response to elevated bids wanted counts, along with rates.

Illinois returns to market with about $1.4 billion of GO bonds on Tuesday, with proceeds funding accelerated pension benefit payments and capital projects.

The deal includes a current refunding of general obligation bonds issued in 2016 and a tender offer for bonds that have not yet reached their call date.

Currently, it's a Goldilocks market, said Kim Olsan, senior fixed income portfolio manager at NewSquare Capital: "Just right enough for just enough people, and steady [enough] that there doesn't seem to be any [big] price pressure at the moment."

There is a lot of money out there, and investors seem comfortable putting it to work.

In this Market Intelligence analysis, Jeff Lipton warns that granting states access to Chapter 9 would be deeply disruptive, likely forcing muni yields higher and liquidity lower, while underscoring why states' legal protections and reserves still support strong willingness to pay.

Minnesota Community Energy priced $803 million of prepaid gas bonds after a delay driven by volatility from the Iran war.

"A lot of the perception is the Iran situation and energy and everything else is temporary, so if municipal yields are higher, let's take advantage of it," said Pat Luby, head of municipal strategy at CreditSights.

If "we get another day of this, that will help the markets continue to trade in a better place," said Jock Wright, an underwriter at Raymond James.

The HOME deal is being priced through the Philadelphia Redevelopment Authority, but carries ratings on par with the city's issuer ratings.

"We're still seeing continued yield pressure out there from the market outlook investors have with the conflict in Iran," said Ajay Thomas, head of public finance at FHN Financial.

The market is navigating volatility driven by geopolitical issues, which has led to trouble for certain deals.