Municipals were steady for the third consecutive trading session ahead of a robust new-issue calendar that boasts the largest deal this year. U.S. Treasuries were little changed and equities ended up.
The two-year muni-UST ratio Friday was at 62%, the five-year at 65%, the 10-year at 76% and the 30-year at 95%, according to Municipal Market Data's 3 p.m. ET read. ICE Data Services had the two-year at 61%, the five-year at 66%, the 10-year at 75% and the 30-year at 94% at a 4 p.m. read.
"On the back of this week's tariff deals, coupled with additional clarity by the Trump administration with respect to the Fed[eral Reserve] chair's future, Treasury yields declined slightly across the curve, with the 30 year point moving away from the closely-watched 5% threshold," said Barclays strategists.
In turn, munis mostly moved lower with USTs and muni-UST ratios were little changed, they said.
Overall, ratios cheapened since mid-July, driven by divergent rate paths between Treasuries' slow rally and munis' selloff (5-year-plus from 4 bp to 11 bp higher)," said BofA strategists.
Ratios cheapened roughly four percentage points at five years and out since July 15, they noted.
"It also shows, however, that ratios are much lower than the peak levels reached immediately post-Liberation Day," but there is less richening out the curve, BofA strategists said.
The 10-, 20- and 30-year ratios are around 11 percentage points richer compared to ratios inside seven years, which are at least 17 percentage points richer, versus April's peak ratio, they said.
The front-end has outperformed over the past several months, as investors attempted to "stay close to the shore while shortening duration," Barclays strategists said.
Due to this, five-year ratios have outperformed their longer counterparts rather "dramatically," resulting in muni curves continuing to steepen, they said, noting the 5s10s, 10s20 and 10s30s curves are currently at their steepest levels in years.
"In our view, investors should continue extending duration as much as they are able to in order to take advantage of the curve steepening and an attractive rolldown," Barclays strategists said.
Issuance for the week of July 28 is estimated at $11.035 billion, with $9.018 billion of negotiated deals and $2.017 billion of competitive deals on tap, according to LSEG.
The Public Finance Authority leads the negotiated calendar with $3.5 billion of senior lien toll revenue bonds for the Georgia SR 400 Express Lanes project.
Next week's deals will be more "dependent than usual on rate [volume] and fund flows, given the reliance on participation from long-dated and high-yield funds, which have seen the most difficult flow environment," said J.P. Morgan strategists, led by Peter DeGroot.
Among the seven largest deals on the calendar, the largest is a $3.5 billion AMT deal, three are BBB-rated, one is insured with a non-rated underlying and one is a A-plus rated healthcare deal, they said.
"From a broader market perspective, levels on these deals should not reprice the AAA curve, but could drive the overall tone in the market. Still positive catalysts remain in (i) compelling long-end yields, (ii) attractive valuations compared to taxable fixed income, and (iii) the anticipated receipt of 1H August reinvestment ($30bn) capital beginning on Friday," J.P. Morgan strategists said.
The recent cheapening of the long-end offers investors an opportunity to buy "long-dated, high-quality generic municipal bonds at or near a 5% yield," they said.
"While these factors suggest a tailwind in highly rated long-dated bonds, Thursday's fund flows shifted negative, and next week's economic calendar and Fed meeting are potential catalysts to move rates and drive flows on the follow-through, J.P. Morgan strategists said.
AAA scales
MMD's scale was unchanged: The one-year was at 2.43% and 2.43% in two years. The five-year was at 2.57%, the 10-year at 3.34% and the 30-year at 4.71% at 3 p.m.
The ICE AAA yield curve was little changed: 2.43% (unch) in 2026 and 2.41% (unch) in 2027. The five-year was at 2.61% (unch), the 10-year was at 3.30% (unch) and the 30-year was at 4.67% (unch) at 4 p.m.
The S&P Global Market Intelligence municipal curve was unchanged: The one-year was at 2.43% in 2025 and 2.44% in 2026. The five-year was at 2.57%, the 10-year was at 3.34% and the 30-year yield was at 4.71% at 4 p.m.
Bloomberg BVAL saw small bumps four years and in: 2.40% (-2) in 2025 and 2.42% (-2) in 2026. The five-year at 2.54% (unch), the 10-year at 3.31% (unch) and the 30-year at 4.71% (unch) at 4 p.m.
Treasuries was little changed.
The two-year UST was yielding 3.914% (flat), the three-year was at 3.859% (-1), the five-year at 3.948% (-1), the 10-year at 4.383% (-2), the 20-year at 4.92% (-1) and the 30-year at 4.926% (-1) just before the close.
Primary to come
The Public Finance Authority (Baa3///BBB+) is set to price $3.5 billion of senior lien toll revenue bonds (Georgia SR 400 Express Lanes project). J.P. Morgan.
Orlando, Florida is set to price Thursday $420.115 million of non-rated contract tourist development tax revenue bonds (Camping World Stadium), insured by Assured Guaranty. J.P. Morgan.
The Wisconsin Health and Educational Facilities Authority (/A+/A+/) is set to price Tuesday $414.035 million of revenue bonds (Hospital Sisters Credit Group), Series 2025A. Morgan Stanley.
The Georgetown Independent School District, Texas, (Aaa/AAA//) is set to price Monday $340.995 million of PSF-insured unlimited tax school building and refunding bonds. Siebert Williams Shank.
Guam (Baa3///) is set to price Tuesday $268.99 million of business privilege tax refunding bonds, Series 2025G. Wells Fargo.
The Terrell Independent School District, Texas, (Aaa/AAA//) is set to price Wednesday $263.11 million of PSF-insured unlimited tax school building bonds. Piper Sandler.
The Dormitory Authority of the State of New York (Baa3/BBB//) is set to price Thursday $246.52 million of Mount Sinai Obligated Group revenue bonds. Jefferies.
The Comal Independent School District, Texas, is set to price $213 million of PSF-insured unlimited tax school building bonds. Mesirow Financial.
The Gregory-Portland Independent School District, Texas, (Aaa/AAA//) is set to price Tuesday $198.66 million of PPSF-insured unlimited tax school building bonds. Siebert Williams Shank.
The North East Independent School District, Texas, (Aaa//AAA/) is set to price Tuesday $191.665 million of PSF-insured unlimited tax refunding bonds. UMB Bank.
The Community Development Administration of the Maryland Department of Housing and Community Development (Aa1//AA+/) is set to price Tuesday $155 million of taxable residential revenue refunding social bonds, Series 2025F. Jefferies.
The Public Finance Authority is set to price Thursday $153.11 million of non-rated taxable revenue bonds (Prestwick Holdings LLC project). Morgan Stanley.
The Celina Independent School District, Texas, (Aaa/AAA//) is set to price Tuesday $130 million of PSF-insured unlimited tax school building bonds, Series 2025A. Piper Sandler.
The Vermont Bond Bank (Aa2/AA+//) is set to price Tuesday a $123.245 million deal, consisting of $73.995 million of Series 2 local investment bonds and $49.25 million of Series 3 refunding bonds. Morgan Stanley.
The Princeton Independent School District, Texas, (Aaa//AAA/) is set to price Tuesday $118.715 million of PSF-insured unlimited tax school building bonds. RBC Capital Markets.
Pearland, Texas. (/AA/AA+/) is set to price Monday $114.86 million of certificates of obligation, Series 2025B. Baird.
The New York State Housing Finance Agency (Aa2///) is set to price $108.6 million of sustainability affordable housing revenue bonds, consisting of $20.65 million of 2025 Series C-1 and $87.95 million of 2025 Series C-2. Ramirez.
Competitive
Washington (Aaa/AA+/AA+/) is set to sell $539.43 million of various purpose GOs, Series 2026A, Bid group 1 at 10:15 a.m. Eastern Thursday; $486.66 million of various purpose GOs, Series 2026A, Bid group 2 at 10:45 a.m.; $283.335 million of motor vehicle fuel tax and vehicle-related fees GOs, Series 2026B at 11:45 a.m.; and $152.835 million of taxable GOs, Series 2026T at 11:15 a.m., Eastern.
The Orangeburg County School District, South Carolina, is set to sell $190 million of general obligation bond anticipation notes at 11 a.m. Tuesday.
Pearland, Texas, is set to sell $114.86 million of certificates of obligation at 11 a.m. Tuesday.
The Waxahachie Independent School District, Texas, (Aa3/AA-//) is set to sell $100 million of PSF-insured unlimited tax school building bonds at 1 p.m. Monday.
