Bond markets had a muted reaction Friday to the news that President Donald Trump will impose a new 10% global tariff, hours after the Supreme Court struck down the administration's use of the International Economic Emergency Powers Act to enact tariffs.
Many market participants expected the administration would find a way to implement, or reimplement, a tariff regime, said Dora Lee, director of research and partner at Belle Haven.
"There's going to be some sort of volatility between now and when they figure out the workaround. I don't think it will be as tumultuous as Liberation Day, but there will definitely be some bumps in the road," she said.
Bond markets believed Trump would likely keep tariffs in place in some form — even before the president made his announcement later in the afternoon — which partly explains their muted response throughout the day.
Equities "bounced" on the news of the Supreme Court's ruling, while USTs across the curve saw yields rise then settle following the announcement, said Ajay Thomas, head of public finance at FHN Financial.
Munis remained "range-bound with cash available for investors primarily driving the market's performance balanced against supply dynamics," he said.
"The market interpreted the decision as a step toward clarity rather than disruption," said James Pruskowski, managing director at Hennion & Walsh. "While the ultimate path for trade policy remains unresolved, the initial market response suggests confidence that economic activity and corporate planning are unlikely to be upended immediately."
"Clearly, the markets had been anticipating for some time that the Supreme Court decision would rule the tariffs to be improperly implemented, and consequently, the impact has been relatively muted so far," said Scott Colbert, chief economist and director of fixed income management at Commerce Trust.
The "muted" market reaction suggests the Supreme Court's ruling was largely priced in, said Gina Bolvin, president of Bolvin Wealth Management Group.
The decision will have limited economic impact as the IEEPA tariffs accounted for about 60% of those imposed, she said.
In the aftermath of the Supreme Court ruling, market participants posited this may not be the end of tariffs.
"Investors have considered that the Trump administration has planned for the unfavorable SCOTUS ruling for months now and is likely to find another vehicle to enact tariffs rather than scrap the policy altogether," Thomas said.
"We expect the Trump administration to impose levies through a more drawn-out, piecemeal approach under other trade legislation, and we believe that lower-court distribution of refunds will take time," said Jennifer Timmerman, senior investment strategy analyst at Wells Fargo Investment Institute.
The overall throughline — that tariffs would continue in some form — was indeed correct, as President Trump said in an afternoon speech that he would sign orders to impose a new global 10% tariff.
The Trump administration is "hellbent" on keeping any tariffs alive and it's going to pursue other means to do so, said Chris Brigati, managing director and CIO of SWBC.
"The market impact of this decision, on the surface, is a little bit dovish, especially on the short end of the curve," he said.
"Ultimately, its impact on the stock market is divided: U.S. businesses and industries, like the U.S. steel industry ... would be negatively impacted initially at the margin. It's slightly positive for smaller caps and other industries that didn't have any market tariffs to begin with, but it's kind of just business as usual for them," he said.
Given all the macro and policy noise, investors have been reacting by "simplifying," said Tom Kozlik, managing director and head of public policy and municipal strategy at HilltopSecurities.
The softer-than-expected fourth-quarter gross domestic product figure and the Supreme Court's tariff ruling reinforce and push investors toward more stable assets, and munis "check that box," he said.
To some degree, market participants might be a little more selective, which could be supportive of the muni market overall, according to Kozlik.
The two-year muni-UST ratio Friday was at 59%, the five-year at 58%, the 10-year at 62% and the 30-year at 89%, according to Municipal Market Data's 3 p.m. EDT read. The two-year muni-UST ratio was at 60%, the five-year at 58%, the 10-year at 62% and the 30-year at 89%, according to ICE Data Services.
New-issue calendar
The new-issue calendar is an estimated $10.014 billion, with $8.307 billion of negotiated deals on tap and $1.708 billion of competitives.
The University of California leads the negotiated calendar with $1.934 billion of general revenue bonds, followed by the Black Belt Energy Gas District with $1.1 billion of gas project revenue bonds.
The competitive calendar is led by Santa Clara County Financing Authority, California, with $400 million of lease revenue bonds.
AAA scales
MMD's scale was unchanged: 2.06% in 2027 and 2.06% in 2028. The five-year was 2.13%, the 10-year was 2.52% and the 30-year was 4.23% at 3 p.m.
The ICE AAA yield curve was little changed: 2.10% (unch) in 2027 and 2.07% (unch) in 2028. The five-year was at 2.11% (unch), the 10-year was at 2.54% (-1) and the 30-year was at 4.21% (-1) at 4 p.m.
The S&P Global Market Intelligence municipal curve was unchanged: The one-year was at 2.06% in 2027 and 2.07% in 2028. The five-year was at 2.13%, the 10-year was at 2.52% and the 30-year yield was at 4.20% at 3 p.m.
Bloomberg BVAL was little changed: 2.05% (unch) in 2027 and 2.04% (unch) in 2028. The five-year at 2.09% (unch), the 10-year at 2.49% (unch) and the 30-year at 4.08% (unch) at 4 p.m.
U.S. Treasuries were weaker.
The two-year UST was yielding 3.479% (+2), the three-year was at 3.501% (+2), the five-year at 3.648% (+1), the 10-year at 4.084% (+2), the 20-year at 4.672% (+3) and the 30-year at 4.726% (+3) near the close.
Primary to come
The Regents of the University of California (Aa2/AA/AA/) is set to price $1.934 billion of general revenue bonds, consisting of $962.275 million of Series 2026CE and $976.27 million of Series CF. J.P. Morgan.
The Black Belt Energy Gas District (A2///) is set to price $1.1 billion of gas project revenue bonds, Series 2026E. Goldman Sachs.
Lee County, Florida, (A2//A/AA-/) is set to price Thursday $681.315 million of airport revenue bonds, consisting of $464.145 million of Series 2026A-1 AMT bonds, $169.85 million of Series 2026-A2 AMT bonds and $47.32 million of Series 2026B non-AMT refunding bonds. BofA Securities.
The Arizona Board of Regents (Aa2/AA//) is set to price Tuesday $268.81 million of Arizona State University System revenue bonds, Series 2026A. Wells Fargo.
The Monmouth County Improvement Authority, New Jersey, is set to price Tuesday $251.219 million of governmental pooled loan project notes. Raymond James.
The New York State Environmental Facilities Corp. (Aaa/AAA/AAA/) is set to price Tuesday $234.395 million of State Clean Water and Drinking Water Revolving Funds revenue bonds (New York City Municipal Water Finance Authority Projects-Second Resolution bonds), Series 2026A. Goldman Sachs.
The Western Maricopa Education Center District No. 402, Arizona, (/AA//) is set to price Wednesday a $223.545 million deal. Stifel, Nicolaus & Co.
Orlando, Florida, (/AA+/AAA/) is set to price Tuesday $200.225 million of capital improvement special revenue bonds, consisting of $41.08 million of refunding Series 2026A bonds and $159.145 million of Series 2026B bonds. Ramirez.
The Public Finance Authority (//A-/) is set to price $132.385 million of tax-exempt revenue bonds, Series 2026 (Maniilaq Association Employee Housing Project). Goldman Sachs.
The Pittsburgh Water and Sewer Authority (A2/A+//) is set to price Tuesday $126.295 million of water and sewer system first lien revenue bonds, Series A of 2026. Ramirez.
The Cuyahoga Community College District, Ohio, (/AA+//) is set to price Tuesday $108.510 million of facilities construction and improvement refunding bonds. KeyBanc Capital Markets.
Competitive
The Santa Clara County Financing Authority, California, is set to sell $400 million of lease revenue bonds, 2026 Series A, at 11:30 a.m. Eastern Thursday.
The Clark County School District, Nevada, (A1/AA-//) is set to sell $300.145 million of GO building and refunding bonds, Series 2026A, at 11:30 a.m. Thursday.
Oyster Bay, New York, is set to sell $211.782 million of bond anticipation notes, at 10:45 a.m. Monday.
Hoboken, New Jersey, is set to sell $193.441 million of bond anticipation notes of 2026, Series A, at 11:00 a.m. Thursday.
The Virginia Commonwealth Transportation Board is set to sell $118.96 million of Commonwealth of Virginia transportation capital projects revenue refunding bonds at 10:30 a.m. Wednesday.
Franklin, Tennessee, (Aaa///) is set to sell $105.690 million of GOs at 11 a.m. Wednesday.
