Munis were weaker on Thursday, as U.S. Treasuries cheapened and equities ended lower.
Muni yields cheapened by up to four basis points, while UST yields rose up to five basis points.
On Wednesday, USTs richened by up to 10 points after Treasury Secretary Scott Bessent announced the Treasury would at least double buybacks on long-term government debt to alleviate high UST yields. On Thursday, yields climbed back up,
The muni market is starting to see mixed technicals as the summer winds down, according to Kevin McGuigan of Municipal Market Analytics. Summer reinvestment season is wrapping up, which may create headwinds if issuance remains elevated, McGuigan said.
"Despite this week's correction to higher yields, primary offerings have continued to attract strong order books, while there has been little evidence of a meaningful slowdown in demand from mutual funds, [exchange-traded funds or separately managed accounts]," McGuigan wrote. "The elevated measures of secondary supply via bids wanted and offerings suggest some portfolio repositioning ahead of fall."
Fund flows
Investors added $838.4 million into municipal bond mutual funds in the week ended Wednesday, following $757.9 million of inflows the prior week, according to LSEG Lipper data.
High-yield funds saw inflows of $208.3 million compared to inflows of $338.8 million the previous week.
CUSIP requests fall
In July, the aggregate total of identifier requests for new municipal securities – including municipal bonds, long-term and short-term notes, and commercial paper – fell 21.3% versus June totals.
On a year-over-year basis, overall municipal volumes were down 3.4% through the end of July.
New York led state-level municipal request volume with a total of 229 new CUSIP requests in July, followed by Texas with 191 and California with 91.
For the specific category of municipal bonds, there was a decline of 23.9% month-over-month, and requests are down 7.1% year-over-year.
New-issue market
In the primary market Thursday, Goldman Sachs priced for Energy Southeast(Aa3///) $1.298 billion of energy supply revenue bonds, Series 2026C. The first tranche, $649.01 million of Series 2026C-1, saw 5s of 11/2031 at 4.05% and 5s of 2023 at 4.35%, callable 8/2033.
The second tranche, $648.75 million of Series 2026C-2, saw 5s of 11/2031 at 4.05%, 5s of 2036 at 4.61% and 5.25s of 2037 at 4.67%, callable 8/2037.
Barclays priced for the Mission Economic Development Corp., Texas, (/BB-//) $290.95 million of AMT Natgasoline Project senior lien revenue refunding bonds, with 4.75s of 8/2046 priced at par, callable 8/2031.
In the competitive market, Hennepin County, Minnesota, (/AAA/AAA/) sold to J.P. Morgan Securities $342.84 million of general obligation bonds, Series 2026A, with 5s of 12/2027 at 2.49%, 5s of 2031 at 2.90%, 5s of 2036 at 3.44%, 5s of 2041 at 3.94% and 5s of 2046 at 4.27%, callable 12/2036.
The county also sold to BofA $115.665 million of general obligation refunding bonds, Series 2026B, with 5s of 12/2027 at 2.49%, 5s of 2031 at 2.90%, 5s of 2036 at 3.44% and 4.125s of 2041 at 4.15%, callable 12/2036.
