Municipals were steady to weaker on the front end of the curve Monday, but little changed out long, as U.S. Treasuries cheapened and equities ended mixed.
The two-year muni-UST ratio Monday was at 65%, the five-year at 63%, the 10-year at 70% and the 30-year at 88%, according to Municipal Market Data's 3 p.m. EDT read. ICE Data Services had the two-year at 65%, the five-year at 63%, the 10-year at 71% and the 30-year at 90% at a 4 p.m. read.
Muni investors generally have a "positive outlook" and the new-issue calendar over the next few weeks will be elevated again, with $12.9 billion coming this week, said Birch Creek strategists.
"We suspect deals will be well received, but underwriters will likely price in generous concessions, ultimately posing a challenge for further muni outperformance," they said.
Since August, "the long end has been the main driver of muni returns as we have seen the muni curve flatten by 30 basis points from 229 basis points to 199 basis points since Aug. 1 as investors continued to take advantage of higher yields before the Fed made any cuts later this year," said Jason Wong, vice president of municipals at AmeriVet Securities.
Long-term muni mutual funds have seen around $5.2 billion in inflows since the start of August, while intermediate funds have seen inflows of $2.17 billion, according to LSEG Lipper.
"The front end of the curve is doing most of the heavy lifting for the muni market as investors were in a holding pattern as most of the market was anticipating economic data that would indicate a Fed rate cut," Wong said.
Once economic data solidified the odds of a rate cut, the long end rallied by around 38 basis points while the front end remained relatively flat from Sept. 2 to Oct. 3, he said.
Last week, the muni market saw a "slowdown in activity" after the asset class saw its best monthly performance in nearly two years, said Birch Creek strategists.
Heading into last week, ratios on the front end were below 60%, leaving "little to be desired, causing the curve to flatten as investors re-allocated to longer duration," they said.
Muni yields on the front end were cut one to two basis points, while the rest of the curve saw yields bumped two to four basis points, Wong said.
The new-issue calendar took a "breather" last week with under $8 billion in deals, but "the limited options led to strong subscriptions on negotiated deals and tight bidding on the competitive front, especially for different-name high grades with a little extra spread," Birch Creek strategists said.
A $374 million Aa3/AA- sewer deal was bumped up to 12 basis points out to 30 years, while a $179 million AA- children's hospital was bumped 13 basis points out long, they said.
Even the Los Angeles Department of Water and Power, a credit that rating agencies put
AAA scales
MMD's scale was unchanged: 2.40% in 2026 and 2.32% in 2027. The five-year was 2.32%, the 10-year was 2.91% and the 30-year was 4.21% at 3 p.m.
The ICE AAA yield curve was cut up to four basis points: 2.39% (+4) in 2026 and 2.33% (+4) in 2027. The five-year was at 2.35% (+3), the 10-year was at 2.92% (+1) and the 30-year was at 4.23% (unch) at 4 p.m.
The S&P Global Market Intelligence municipal curve was little changed: The one-year was at 2.40% (+1) in 2025 and 2.31% (+1) in 2026. The five-year was at 2.31% (unch), the 10-year was at 2.91% (unch) and the 30-year yield was at 4.21% (unch) at 3 p.m.
Bloomberg BVAL was little changed: 2.30% (+1) in 2025 and 2.26% (unch) in 2026. The five-year at 2.28% (unch), the 10-year at 2.88% (unch) and the 30-year at 4.21% (unch) at 4 p.m.
Treasuries were weaker.
The two-year UST was yielding 3.596% (+2), the three-year was at 3.616% (+2), the five-year at 3.745% (+3), the 10-year at 4.163% (+4), the 20-year at 4.725% (+5) and the 30-year at 4.759% (+5) near the close.
Primary to come
The Texas Transportation Finance Corp. (Aa1/AA+//) is set to price Tuesday $1.739 billion of subordinate tier toll revenue and refunding bonds, consisting of $1.678 billion of tax-exempt Series 2025A bonds and $61.2 million of taxable Series 2025B bonds. BofA Securities.
New York City (Aa2/AA/AA/AA+/) is set to price Wednesday $1.5 billion of GOs, Fiscal 2026 Series D. J.P. Morgan.
The PeaceHealth Obligated Group (/A-/A+/) is set to price Tuesday $787.356 million of taxable bonds. Morgan Stanley.
The San Diego Unified School District is set to price Wednesday $670 million of GOs, consisting of $7.355 million of taxable Series P-1 Election of 2008 bonds (Aa2///), $92.645 million of Series P-2 Election of 2008 bonds (Aa2//AAA/AAA/), $11.115 million of taxable Series I-1 Election of 2018 bonds (Aa2///), $25 million of Series I-2 Election of 2018 bonds (Aa2//AAA/AAA/), $213.885 million of Series I-3 Election of 2018 bonds (Aa2//AAA/AAA/), $13.825 million of taxable Series C-1 Election of 2022 bonds (Aa2///), $10 million of Series C-2 Election of 2022 bonds (Aa2//AAA/AAA/), and $296.175 million of Series C-3 Election of 2022 bonds (Aa2//AAA/AAA/). Jefferies.
Massachusetts (Aa1/AAA//AAA/) is set to price Wednesday $493.2 million of commonwealth transportation fund revenue and refunding bonds, consisting of $325 million of Series R bonds and $168.2 million of Series 2025A bonds. J.P. Morgan.
Columbus, Ohio, (Aaa/AAA/AAA/) is set to price Tuesday $470.405 million of various purpose GOs, consisting of $218.69 million of unlimited tax bonds, Series 2025A; $23.23 million of limited tax bonds, Series 2025B, $88.545 million of unlimited tax refunding bonds, Series 2025-1; $31.86 million of limited tax refunding bonds, Series 2025-2; $48.165 million of taxable unlimited tax bonds, Series 2025C; and $59.915 million of taxable limited tax bonds, Series 2025D. RBC Capital Markets.
Albany Capital Resource Corp. (A2/A//) is set to price Thursday $385.49 million of tax-exempt revenue refunding bonds (Albany Medical Center Hospital project), Series 2025A. Jefferies.
The New Jersey Housing and Mortgage Finance Agency (/AA-//) is set to price Tuesday $371.695 million of social multi-family revenue bonds, consisting of $123.09 million of non-AMT bonds, Series 2025A; $220.87 million of non-AMT bonds, Series 2025B; and $27.735 million of taxable bonds, Series 2025C. Wells Fargo.
The California Municipal Finance Authority is set to price $371.526 million of municipal certificates, Series 2025-2, consisting of $313.01 million of Class A-1 bonds (/AA-//), $50.156 million of Class A-2 bonds (/BBB//), and $8.36 million of nonrated Class B subordinate bonds. BofA Securities.
The General Authority of South Central Pennsylvania (Aa3//AA-/) is set to price Tuesday $270.215 million of bonds (WellSpan Health Obligated Group), consisting of $92.355 million of Series 2025A bonds and $177.86 million of Series 2025B bonds. BofA Securities.
The Oklahoma Municipal Power Authority (/A/A/) is set to price Tuesday $248.68 million of power supply system revenue and refunding bonds, Series 2025A. Goldman Sachs.
The South Carolina State Housing Finance and Development Authority (Aaa///) is set to price Thursday $195 million of non-AMT mortgage revenue bonds, Series 2025C. BofA Securities.
Ohio (A3/A//) is set to price Thursday $172.815 million of hospital revenue bonds (University Hospitals Health System, Inc.), Series 2025A. BofA Securities.
The Westmoreland County Municipal Authority, Pennsylvania, (/AA//) is set to price Tuesday $152.355 million of municipal service revenue refunding bonds, Series 2025A. Stifel.
The Roanoke Economic Development Authority, Virginia, (Aa3/AA-//) is set to price Tuesday $147.95 million of hospital revenue bonds (Carilion Clinic Obligated group), Series 2025A. BofA Securities.
The Fontana Public Facilities Financing Authority, California, (/AA-//) is set to price Wednesday $135.205 million of lease revenue bonds, Series 2025A. Ramirez.
Gadsden, Alabama, (/AA//) is set to price Tuesday $127.6 million of GO warrants, Series 2025A. Stifel.
The Build NYC Resource Corp. (/BB+//) is set to price Thursday $121.765 million of revenue bonds, consisting of $119.765 million of tax-exempt Series 2025A bonds and $2 million of taxable Series 2025B bonds. Raymond James.
The South Carolina Jobs and Economic Development Authority is set to price Thursday $113.385 million of senior living revenue bonds (Connexion Communities project), consisting of $112.53 million of Series 2025A1 bonds and $855,000 of Series 2025A2 bonds. D.A. Davidson.
Larimer County, Colorado, (/AA+//) is set to price Tuesday $110 million of certificates of participation, consisting of $80.005 million of tax-exempts, Series 2025A, and $29.995 million of taxables, Series 2025B. Piper Sandler.
The Tempe Industrial Development Authority, Arizona, is set to price Thursday $108.595 million of nonrated revenue and refunding bonds (Friendship Village of Tempe project). Ziegler.
Competitive
The Maryland Department of Transportation (Aa1/AAA/AA+/) is set to sell $497.705 million of consolidated transportation refunding bonds, Series 2025C, at 11 a.m. Eastern Wednesday, and $345 million of consolidated transportation bonds, Series 2025B, at 10:30 a.m. on Wednesday.
Oklahoma County, Oklahoma, (Aa1///) is set to sell $215 million of GO limited tax bonds at 9:30 a.m. Wednesday.
Broward County, Florida, (Aa1/AA+//) is set to sell $158.845 million of water and sewer utility revenue refunding bonds at 10:30 a.m. Wednesday.
Jersey City, New Jersey, (A1///) is set to sell $124.45 million of general improvement bonds at 11 a.m. Tuesday.
Houston is set to sell $121 million of tax and revenue notes at 10 a.m. Wednesday.
