Municipal yields fell slightly Thursday while investors digested several sizable new issues and muni mutual funds saw a fifth consecutive week of inflows.
Triple-A yields fell one to four basis points inside of 10 years, depending on the scale, while U.S. Treasuries saw gains of about five basis points across the curve.
The two-year muni-UST ratio Thursday was at 70%, the five-year at 71%, the 10-year at 75% and the 30-year at 92%, according to Municipal Market Data's 3 p.m. ET read. ICE Data Services had the two-year at 67%, the five-year at 70%, the 10-year at 72% and the 30-year at 90% at 4 p.m.
With higher yields and ratios, many participants say investors should be taking advantage of current levels.
"Late-month activity speaks to the effects of elevated supply and bids wanteds," said Kim Olsan, senior fixed income portfolio manager at NewSquare Capital.
Preliminary issuance figures show May supply is at $40.446 billion, according to LSEG, but that figure will rise because several of Thursday's deals, including the Dormitory Authority of the State of New York were not yet tallied.
"A byproduct of that amount of volume is being seen in higher bid list totals — May's average is $1.35 billion or 38% above the 2025 daily level (eight sessions have produced totals over $1.5 billion)," Olsan said.
What has been supportive is the "yield range that has mostly held from April's moderated tone," she said.
"High grades can be bought well into the 3.00% range inside 15 years, and the steepness in the 20-25 year area is holding rates in the mid-4.00% area," Olsan said.
This month, the 10-year MMD spot has held steady or rallied in 10 trading sessions, one more than the 10-year UST, she said.
A "more consistent tone" has assisted issuers in pricing into a month that had "limited redemptive value in terms of principal being returned to investors," Olsan said.
As the end of May approaches, two new issues from Wednesday highlight buyers' demands, she said.
Final levels on Lewisville Independent School District, Texas' $283 million deal (PSF-backed Aaa/AAA with NR/AA+ underlying ratings) saw 5s of 2040 (callable 2034) at 4.11% and spread +24/MMD, Olsan said.
Omaha's Public Power District "offered Aa2/AA bonds with a 10-year 5% yielding 3.42% and spread at just +9/MMD," she said.
Munis currently offer investors an "attractive entry point as risks to the elimination of the municipal-bond tax exemption are receding and income potential has increased," said Brian Rehling, head of global fixed income strategy at Wells Fargo.
"With rates moving higher, now may be a good time for income-oriented investors to consider locking in attractive yields," he said.
The current environment "presents a renewed and potentially more attractive entry point for most municipal investors," said Tom Kozlik, managing director, head of public policy and municipal strategy at HilltopSecurities.
Yields are approaching levels not seen since the three-to-four-week aftermath of 'Liberation Day', "extending what can only be described as a generational opportunity to lock in high-quality, tax-advantaged income," he said, noting this is not a technical bounce.
"The rise in yields is being driven by real and persistent forces — most notably, tariff uncertainty and growing market awareness of Washington's fiscal lack of focus," Kozlik said.
Steep reciprocal tariffs may return after the 90-day pause ends, Treasury Secretary Scott Bessent recently warned.
As the tariffs play out in the courts, uncertainty remains hanging over markets.
"Until this uncertainty is resolved, yields are likely to remain elevated, especially if growth expectations begin to soften," Kozlik said. "The so-called 'fiscal failure' passed by the U.S. House just before Memorial Day, as described by the Committee for a Responsible Federal Budget, has only added to investor unease."
In the primary market Thursday, Wells Fargo preliminarily priced for the Dormitory Authority of the State of New York (Aa2/AA-//) $1.209 billion of tax-exempt New York University revenue refunding bonds, Series A, with 5s of 7/2026 at 2.89%, 5s of 2030 at 2.99%, 5s of 2035 at 3.53%, 5s of 2040 at 4.15%, 5s of 2045 at 4.60%, 5.25s of 2051 at 4.76% and 5.25s of 2055 at 4.81%, callable 7/1/2035.
Jefferies priced for the
Barclays preliminarily priced for the authority $750 million of turnpike revenue bonds, Series 2025 A, with 5s of 1/2043 at 4.54%, 5s of 2045 at 4.65%, 5.25s of 2050 at 4.78%, 4.75s of 2050 at 4.90%, 5.25s of 2055 at 4.87% and 4.75s of 2055 at 4.97%, callable 7/1/2035.
Jefferies priced for the authority $68.36 million of forward-delivery turnpike revenue bonds, Series 2025 C, with 5s of 1/2031 at 3.27% and 5s of 2035 at 3.66%, noncall.
Wells Fargo priced for the South Dakota Housing Development Authority is set to price Thursday $199 million of homeownership mortgage bonds. The first tranche, $125 million of non-AMT 2025 Series C bonds, saw all bonds price at par — 4.5s of 11/2036, 4.75s of 11/2040, 5s of 11/2045 and 5.1s of 5/2052 — except for 6.25s of 11/2056 at 4.00%, callable 11/1/2033.
Details for the second tranche, $74 million of taxable 2025 Series D bonds, were unavailable at of 3:30 p.m.
In the competitive market, the Florida Department of Transportation (Aa2/AA/AA/) sold $118.11 million of turnpike revenue bonds, Series 2025B, to BofA Securities, with 5s of 7/2026 at 2.88%, 5s of 2030 at 2.96%, 5s of 2035 at 3.50%, 5s of 2040 at 4.07%, 5s of 2045 at 4.54%, 4.75s of 2050 at 4.82% and 5s of 2055 at 4.82%, callable 7/1/2035.
Fund flows
Investors added $526 million to municipal bond mutual funds in the week ended Wednesday, following $739.5 million of inflows the prior week, according to LSEG Lipper data.
High-yield funds saw inflows of $150.5 million compared to the previous week's inflows of $192 million.
Tax-exempt municipal money market funds saw inflows of $1.987 billion for the week ending May 27, bringing total assets to $141.384 billion, according to the Money Fund Report, a weekly publication of EPFR.
The average seven-day simple yield for all tax-free and municipal money-market funds fell to 2.49%.
Taxable money-fund assets saw $15.443 billion pulled, bringing the total to $6.766 trillion.
The average seven-day simple yield was at 3.97%.
The SIFMA Swap Index fell to 1.97% on Wednesday compared to the previous week's 2.57%
AAA scales
MMD's scale was bumped one to two basis points inside 10 years: The one-year was at 2.79% (-2) and 2.77% (-2) in two years. The five-year was at 2.84% (-2), the 10-year at 3.33% (unch) and the 30-year at 4.52% (unch) at 3 p.m.
The ICE AAA yield curve saw bumps on bonds 10 years and in: 2.78% (-4) in 2026 and 2.71% (-4) in 2027. The five-year was at 2.85% (-3), the 10-year was at 3.26% (-1) and the 30-year was at 4.47% (unch) at 4 p.m.
The S&P Global Market Intelligence municipal curve was bumped up to two basis points: The one-year was at 2.80% (-2) in 2025 and 2.78% (-2) in 2026. The five-year was at 2.83% (-2), the 10-year was at 3.32% (unch) and the 30-year yield was at 4.52% (unch) at 4 p.m.
Bloomberg BVAL saw yields fall slightly: 2.76% (-1) in 2025 and 2.77% (-1) in 2026. The five-year at 2.86% (-1), the 10-year at 3.30% (-1) and the 30-year at 4.49% (unch) at 4 p.m.
Treasuries were stronger across the curve.
The two-year UST was yielding 3.95% (-5), the three-year was at 3.91% (-5), the five-year at 4.01% (-6), the 10-year at 4.43% (-5), the 20-year at 4.95% (-5) and the 30-year at 4.93% (-5) at the close.
