Munis were narrowly mixed Monday as the front end of the curve was slightly weaker and the asset class saw small gains out long. U.S. Treasuries were steady to firmer in spots and equities rallied.
The two-year muni-UST ratio Monday was at 68%, the five-year at 65%, the 10-year at 69% and the 30-year at 90%, according to Municipal Market Data's 3 p.m. EDT read. ICE Data Services had the two-year at 68%, the five-year at 66%, the 10-year at 69% and the 30-year at 89% at a 4 p.m. read.
Despite the ongoing heavy slate of issuance, the muni market strengthened throughout last week.
"The story remains the same: solid demand is more than enough to take down the sizable new issue supply," said Daryl Clements, a portfolio manager at AllianceBernstein.
The rate strength in investment-grade munis last week bolstered the bullishness in muni market participants, according to Birch Creek Capital analysts.
Investment-grade muni mutual funds saw $663 million in inflows, according to LSEG Lipper, " bolstering demand and reducing the need to generate liquidity, as [bid wanted] volumes fell by 7-17% in 5y+ maturities," Birch Creek's analysts wrote in the firm's weekly market commentary.
Additionally, "dealers reported plenty of inquiry in the secondary market, leading to solid volumes and customer purchases off just 3% from recent averages," they said.
Most new issues pricing last week saw oversubscriptions, Birch Creek reported. The Dormitory Authority of the State of New Yorks $1.46 billion deal, for example, saw yields reprice as much as 10-15 basis points from the retail order period to the final pricing.
The high-yield market, meanwhile, is still grappling with low supply, Birch Creek said.
Several major asset managers have underperformed this year, Birch Creek noted, after "taking outsized positions on troubled credits and as broader macro concerns begin popping up outside of the asset class."
However, most high-yield managers have built large cash cushions from their strong inflows, "so it would likely take a streak of sizable outflows before the market begins to meaningfully underperform."
Elsewhere, long bonds have had an "impressive rally, which has closed the underperformance gap with shorter bonds," Clements said.
Despite the recent long-bond rally, the "upside in long bonds remains attractive," he said.
"With just a decline of 50 basis points in yields, long bonds would return approximately 8.7%," he said.
And given that the 10s/20s curve is twice the longer-term average, it's "reasonable" to expect the curve to continue to flatten and long bonds to outperform shorter maturity bonds.
AAA scales
MMD's scale was narrowly mixed: 2.47% (+2) in 2026 and 2.37% (+2) in 2027. The five-year was 2.34% (+1), the 10-year was 2.74% (-2) and the 30-year was 4.13% (unch) at 3 p.m.
The ICE AAA yield curve was narrowly mixed: 2.43% (+1) in 2026 and 2.35% (+2) in 2027. The five-year was at 2.36% (+2), the 10-year was at 2.77% (-1) and the 30-year was at 4.08% (-1) at 4 p.m.
The S&P Global Market Intelligence municipal curve was narrowly mixed: The one-year was at 2.46% (+2) in 2025 and 2.38% (+2) in 2026. The five-year was at 2.34% (+1), the 10-year was at 2.75% (-2) and the 30-year yield was at 4.11% (unch) at 3 p.m.
Bloomberg BVAL was narrowly mixed: 2.40% (+1) in 2025 and 2.36% (+1) in 2026. The five-year at 2.25% (+1), the 10-year at 2.75% (-1) and the 30-year at 4.07% (-1) at 4 p.m.
Treasuries were firmer out long.
The two-year UST was yielding 3.462% (flat), the three-year was at 3.465% (flat), the five-year at 3.577% (-2), the 10-year at 3.987% (-2), the 20-year at 4.546% (-3) and the 30-year at 4.576% (-3) near the close.
Primary to come
The Texas Transportation Commission (Aaa//AAA/) is set to price Tuesday $1.772 billion of general obligation mobility fund refunding bonds. Loop Capital Markets.
CPS Energy (Aa2/AA-/AA-/) is set to price Tuesday $1.398 billion of taxable revenue refunding bonds, New Series 2025A. BofA Securities.
CPS Energy (Aa3/A+/AA-/) is also set to price Wednesday $514.83 million of variable rate junior lien revenue and refunding bonds, Series 2025A. Truist.
Additionally, CPS Energy (Aa2/AA-/AA-/) is set to price Tuesday $324.13 million of revenue refunding bonds, New Series 2025B. BofA Securities.
The New Jersey Transportation Trust Fund Authority (A1/A/A/A/) is set to price Wednesday $1.5 billion of transportation program bonds, Series 2025 AA. J.P. Morgan.
The New York City Transitional Finance Authority (Aa1/AAA/AAA/) is set to price Wednesday $1.5 billion of future tax secured tax-exempt subordinate bonds, Fiscal 2026 Series B. Siebert Williams Shank.
The Kentucky State Property and Buildings Commission (Aa3//AA-/) is set to price Wednesday $940.27 million of Project No. 133 revenue bonds, consisting of $775 million of Series A bonds and $165.27 million of Series B refunding bonds. BofA Securities.
The California State Public Works Board (Aa3/A+/AA-/) is set to price Tuesday a $642.505 million deal, consisting of $621.195 million of Series 2025C and $21.31 million of Series 2025D. J.P. Morgan.
The Wayne County Airport Authority (A1/A+//AA/) is set to price Tuesday $465.58 million of Detroit Metropolitan Wayne County Airport revenue refunding bonds, consisting of $28.965 million of Series D, $194.405 million of Series E, $7.125 million of Series F, $189.91 million of Series G and $45.175 million of Series H. Siebert Williams Shank.
The Sacramento City Unified School District, California, (/AA//) is set to price Thursday $451.88 million of GO bonds, consisting of $262.5 million of GO 2020 Election (Measure H) bonds, Series C; $143 million of GO 2024 Election (Measure D) bonds, Series A; $9.855 million of 2025 GO refunding bonds, Series A; and $36.525 million of 2025 GO refunding bonds, Series B. Loop Capital Markets.
The Williamsburg Economic Development Authority, Virginia, (/A+//) is set to price Tuesday $330 million of taxable Colonial Williamsburg Foundation Project revenue bonds. Wells Fargo.
The Cumberland County Industrial Facilities and Pollution Control Financing Authority (Aa1///) is set to price Tuesday $250 million of Project Aero solid waste disposal revenue bonds. Oppenheimer.
The Frisco Independent School District, Texas, (Aaa/AAA//) is set to price Tuesday $214.4 million of PSF-insured unlimited tax refunding bonds, Series 2025B. Piper Sandler.
North Slope Borough, Alaska, (/AA//AA+/) is set to price Wednesday $186.75 million of GOs. Jefferies.
The Oklahoma City Water Utilities Trust (Aaa/AAA//) is set to price Thursday $185.91 million of utility system revenue refunding and improvement bonds. Morgan Stanley.
The Conroe Independent School District, Texas, (Aaa/AAA//) is set to price Wednesday $185.14 million of PSF-insured unlimited tax refunding bonds. RBC Capital Markets.
The Comal Independent School District, Texas, (Aaa///) is set to price Tuesday $184.21 million of PSF-insured unlimited tax refunding bonds. Frost Bank.
The Missouri Joint Municipal Electric Utility Commission (A3//A/) is set to price Tuesday $151.37 million of Marshall Energy Center Project power project revenue. Wells Fargo.
The Glendale Industrial Development Authority, Arizona, (/AA-/AA/) is set to price Thursday $150 million of Midwestern University revenue. Raymond James.
Metrocare Services (Aa3///) is set to price Wednesday $142.49 million of revenue bonds. Raymond James.
The Maryland Health and Higher Educational Facilities Authority (A1/AA//) is set to price Wednesday $135.565 million of TidalHealth issue revenue bonds, Series 2025C. KeyBanc.
The Village Community Development District No. 16, Florida, is set to price Thursday $127 million of nonrated special assessment revenue bonds. Jefferies.
The Colorado Health Facilities Authority (/A-//) is set to price Thursday $125 million of Craig Hospital Project hospital revenue bonds, consisting of $105 million of Series A and $20 million of Series B. RBC Capital Markets.
The South Carolina Student Loan Corp. (/AA//) is set to price Thursday $112.1 million of taxable senior student loan revenue bonds, Series 2025A. RBC Capital Markets.
Oregon (Aa1/AA+/AA+/) is set to price Thursday $109.44 million of GOs, Series 2025K. Morgan Stanley.
The IPS Multi-School Building Corp., Indiana, (/AA+//) is set to price Wednesday $107.75 million of social ad valorem property tax first mortgage bonds. Stifel.
Pensacola, Florida, (/A+/A+/A+/) is set to price Tuesday $104.625 million of AMT airport revenue bonds. BofA Securities.
The Mission Economic Development Corp. (A1///) is set to price Wednesday $100 million of Vinton Steel LLC Project solid waste disposal revenue bonds. Jefferies.
Competitive
The Triborough Bridge and Tunnel Authority, New York, is set to sell $230 million of second subordinate revenue bond anticipation notes, Series 2025A, at 10:45 a.m. Tuesday.
Suffolk County, New York, (/AA-/AA-/) is set to sell $188.735 million of public improvement serial bonds, Series 2025A, at 11 a.m. Thursday.
Fayetteville, North Carolina, (Aa2/AA/AA/) is set to sell $156.135 million of public works commission revenue bonds, at 11 a.m. Tuesday.
Henrico County, Virginia, (///AAA/) is set to sell $125 million of water and sewer system revenue bonds, Series 2025D, at 10:30 a.m. Thursday.
Lawrence, Kansas, is set to sell $121.57 million of water and sewage system improvement and refunding revenue bonds at noon Thursday.
Jessica Lerner contributed to this story.
