Municipals were weaker Monday as muni yields rose in sympathy with U.S. Treasury yields. Equities ended down.
The two-year ratio Monday was at 76%, the five-year at 76%, the 10-year at 77% and the 30-year at 91%, according to Municipal Market Data's 3 p.m. ET read. ICE Data Services had the two-year at 76%, the five-year at 76%, the 10-year at 77% and the 30-year at 92% at 4 p.m.
Even with the weakness on Monday, the muni market has had a good recovery from the period of extreme volatility after "Liberation Day," where there was significant underperformance in the tax-exempt market versus other fixed-income markets, said Brad Libby, a fixed-income portfolio manager and credit analyst at Hartford Funds.
In the two weeks following that, and particularly over the past seven to eight trading sessions, tax-exempts outperformed taxables, he noted.
Ratios still look attractive and muni yields have steadily fallen from the April 9 highs, even taking into account days where yields are cut, like Monday.
Last week, the muni market rallied for the third consecutive week, outperforming USTs and "slowly clawing back" early April's losses, said Birch Creek strategists.
The benchmark AAA curve saw yields were bumped 11 to 15 basis points, while LSEG Lipper reported inflows of $1.6 billion in muni mutual funds after seven straight weeks of outflows, Birch Creek strategists noted.
Bid wanteds fell 19% and hit rates increased 8% as "buyers continued to find value at these elevated rates and ratios," they said.
Additionally, market participants received a "fresh injection of cash" from May 1 principal and interest redemptions, which is the start of a seasonally strong period through the summer months, they said.
"Dealers reported having some of their broadest inquiries and customer orders in weeks, with all types of accounts looking to get invested," Birch Creek strategists said.
Focus was on the primary market last week, with Birch Creek reporting that one dealer estimated that 90% of the focus earlier in the week was on new issues, they said.
The calendar last week swelled to $14 billion, the highest of the year, but "the influx of capital and wide spreads led to severe oversubscriptions and disappointing allotments," Birch Creek strategists said.
One deal that was "significantly oversubscribed" was a nearly $1 billion deal from the Los Angeles Department of Water and Power, Libby said.
"The initial price talk on that was like +60. There were $13 billion in orders on that deal. So they bumped that 20, and ended up in the +40s area," he noted.
Supply this week is lighter at $9 billion, "though several deals are waiting in the wings and can pop into the market if stronger conditions persist," Birch Creek strategists said.
Next week already boasts some large deals with $1.5 billion from the New York City Transitional Finance Authority, $1.05 billion from the Dormitory Authority of the State of New York and $840 million from the Harris County Hospital District, Texas.
The market continues to be "highly sensitive to the whims of political and economic headlines, and the late week outperformance may easily reverse course if this treasury trend continues," Birch Creek strategists said.
However, if rates remain relatively rangebound, the muni market "should have room to outperform given the stronger technical period we are entering alongside still-attractive after-tax spreads," they said.
AAA scales
MMD's scale was cut three to five basis points: The one-year was at 2.91% (+5) and 2.92% (+3) in two years. The five-year was at 3.00% (+3), the 10-year at 3.33% (+4) and the 30-year at 4.40% (+4) at 3 p.m.
The ICE AAA yield curve was cut up to two basis points: 2.88% (unch) in 2026 and 2.91% (+1) in 2027. The five-year was at 3.00% (+2), the 10-year was at 3.32% (+2) and the 30-year was at 4.40% (+1) at 4 p.m.
The S&P Global Market Intelligence municipal curve was cut four to five basis points: The one-year was at 2.90% (+4) in 2025 and 2.94% (+5) in 2026. The five-year was at 3.01% (+4), the 10-year was at 3.33% (+4) and the 30-year yield was at 4.39% (+4) at 4 p.m.
Bloomberg BVAL was cut up two to three basis points: 2.85% (+2) in 2025 and 2.91% (+2) in 2026. The five-year at 3.03% (+3), the 10-year at 3.34% (+3) and the 30-year at 4.40% (+3) at 4 p.m.
Treasuries were weaker.
The two-year UST was yielding 3.842% (+2), the three-year was at 3.822% (+1), the five-year at 3.942% (+2), the 10-year at 4.342% (+3), the 20-year at 4.842% (+4) and the 30-year at 4.829% (+4) near the close.
Primary to come
Yale University is set to price Thursday an $850 million deal. The university will price $500 million through the Connecticut Health and Educational Facilities Authority, consisting of $250 million of Series B-1 revenue bonds and $250 million of Series B-2 revenue bonds, and $350 million of Series 2025A taxable bonds through the university itself. Barclays.
The Louisiana Public Facilities Authority (A3/A//) is set to price Thursday for the Ochsner Clinic Foundation Project $383.36 million of revenue and refunding revenue bonds, Series 2025A, and $100.15 million of refunding revenue bonds. Jefferies.
The Mississippi Hospital Equipment and Facilities Authority is set to price Thursday for the Ochsner Clinic Foundation Project $129.385 million of refunding revenue bonds, Series 2025C. Jefferies.
The New Hampshire Health and Education Facilities Authority (/A/A/) is set to price Thursday for the Dartmouth Health Obligated Group $420.285 million of revenue bonds. Jefferies.
The Palm Beach County School Board, Florida, (Aa3//AA-/) set to price Tuesday $278.82 million of certificates of participation, Series 2025A, serials 2026-2032. BofA Securities.
The Indianapolis Local Public Improvement Bond Bank (A1//A+/) is set to price Tuesday for the Indianapolis Airport Authority Project $262.23 million, with $156.985 million of non-AMT Series 2025B-1 bonds, serials 2031-2045, terms 2050, 2055, 2060, and $105.245 million of AMT Series 2025B-2 bonds, serials 2027-2045, terms 2050, 2055. Barclays.
The bank (/AA-//) is set to price Wednesday for the Indianapolis Public Transportation Corp. Project $125 million of local income tax revenue bonds, Series 2025 A, serials 2025-2035, terms 2036, 2037, 2038, 2039, 2040, 2041, 2042, 2043, 2045. Stifel.
The Oklahoma Capitol Improvement Authority (Aa2/AA/AA-/) is set to price Tuesday $256.155 million of state highways capital improvement revenue bonds, Series 2025A. Goldman Sachs.
The Ontario Public Financing Authority, California, (/AA-/AA-/) is set to price Tuesday $237.5 million of 2025A lease revenue bonds, serials 2026-2045, terms 2050, 2055. Ramirez.
Pennsylvania Higher Education Assistance Agency is set to price Thursday $225 million of tax-exempt AMT fixed-rate education loan revenue bonds, consisting of $177 million of senior Series 2025-1A bonds (/AA//), serials 2030-2034, 2046, and $48 million of subordinate Series 2025-1C bonds (/BBB//), serials 2052. RBC Capital Markets.
The Indiana Housing and Community Development Authority (Aaa///) is set to price Tuesday $223.435 million of social single family mortgage revenue bonds, consisting of $88.83 million of non-AMT Series B-1 bonds, $3.67 million of AMT Series B-2 bonds and $130.935 million of taxable Series B-3 bonds. J.P. Morgan.
The East Bay Municipal Utility District, California, (Aa1/AAA//) is set to price Tuesday $211.195 million of wastewater system revenue bonds, consisting of $28.44 million of green Series 2025A bonds, serials 2041-2045, terms 2050, 2055, and $182.755 million of refunding Series 2025B bonds, serials 2027-2040. Siebert Williams Shank.
The Illinois Finance Authority (/BB+//) is set to price Wednesday for the Illinois Institute of Technology $195 million of revenue bonds, consisting of $127.575 of Series 2025A bonds, serials 2040-2046, and $67.425 million of taxable Series 2025B bonds, serials 2030-2039. PNC Capital Markets.
Texas Department of Housing and Community Affairs (Aaa/AA+//) is set to price Tuesday $187.5 million of non-AMT residential mortgage revenue and refunding bonds, Series 2025B, serials 2026-2037, terms 2040, 2045, 2050, 2055, 2056. RBC Capital Markets.
The Massachusetts Development Finance Agency (Baa3//BBB-/) is set to price Thursday for Suffolk University $158.405 million of revenue bonds. Morgan Stanley.
The West Virginia Economic Development Authority (Ba2/BB+/BB+/) is set to price Tuesday $150 million of solid waste disposal facilities revenue bonds, serial 2055. Wells Fargo.
The Stockton Unified School District, California, (Aa3///) is set to price Thursday $140 million of BAM-insured 2022 Election GOs, Series A, serials 2031-2045, term 2049. Loop Capital Markets.
The MIDA Cormont Public Infrastructure District is set to price Thursday $139.737 million of non-rated bonds, consisting of $46 million of Series 1, $74.271 million of Series 2 and $19.466 million of Series 3. D.A. Davidson.
Mt. Diablo Unified School District, California, (Aa3///) is set to price Tuesday $138.385 million of GOs, consisting of $55 million of 2018 Election Series C bonds, serials 2026-2042, and $83.385 million of 2025 refunding GOs, serials 2025-2035. Stifel.
The Liberty Hill Independent School District, Texas, (Aaa///) is set to price Tuesday $128 million of PSF-insured unlimited tax school building bonds, serials 2026-2058. Piper Sandler.
Grand Rapids, Michigan, (Aa2/AA//) is set to price Wednesday $125.535 million of limited tax GOs, serials 2030-2055. Huntington Securities.
The Vail Home Partners Corp., Colorado, is set to price Tuesday $118.465 million of non-rated housing facilities revenue bonds. Piper Sandler.
Denton County, Texas, (Aaa/AAA//) is set to price Thursday $108.45 million of permanent improvement and refunding bonds, serials 2026-2045. Cabrera Capital Markets.
The Regional School Unit No. 14, Maine, (Aa2/AA//) is set to price Tuesday $105 million of GOs, serials 2026-2045. Raymond James.
Competitive
Fulton County, Georgia, is set to sell $275 million of general fund tax anticipation notes at 10 a.m. Wednesday.
Ann Arbor Public Schools is set to sell $205.27 million of 2025 school building and site and refunding bonds at 10:30 a.m. Tuesday.
The Beaufort County School District, South Carolina, is set to sell $132.2 million of GOs, Series 2025B, at 1 p.m. Thursday.
