Munis were steady Friday ahead of a larger new-issue calendar. U.S. Treasuries saw losses and equities rallied to close with the best session in months.
The two-year muni-UST ratio Friday was at 60%, the five-year at 58%, the 10-year at 62% and the 30-year at 88%, according to Municipal Market Data's 3 p.m. EDT read. The two-year muni-UST ratio was at 61%, the five-year at 57%, the 10-year at 62% and the 30-year at 87%, according to ICE Data Services.
Muni yields delivered some "improvement" since Jan. 29 because of strong demand conditions in February and lighter-than-expected supply year-to-date, said BofA strategists.
The AAA MMD curve's bull steepening inside 15 years has extended to 20-year-plus maturities, which has led to muni ratios collapsing further, they said.
Muni ratios continued "grinding lower" early in the week, though they lagged in Thursday's UST rally, said Barclays strategists led by Mikhail Foux.
Usually, high-grade tax-exempt ratios reach their lows around this time of the year before "drifting higher."
"It is hard to see these ratios rising in February given the Treasury market status and muni market demand conditions," said BofA strategists. "Indeed, the pressure for these ratios to move even lower may persist throughout the month."
The averages of five-year and 10-year MMD-UST ratios over the last five years are at 64% and 73%, respectively, compared with current levels of 58% and 62%, while the current 30-year ratio of 88% is near the top of its five-year average, Barclays strategists said.
"Even more recently (February 2024), 5y and 10y ratios were very close to current levels, but 30y ratios were substantially lower (81%-82%)," they said
If demand for longer-dated securities improves, the long end — which lagged last year by a wide margin — should start performing better. To date, the long end has underperformed the front and the belly of the yield curve for both investment-grade and high-yield indices, Barclays strategists said.
Meanwhile, the 15-year bucket has "fared the best for both market segments," they said.
In high-yield, 20- to 30-year maturities have outperformed high grade, but one- to 10-years have underperformed, they said.
This has led to similar returns for both indices, according to Barclays strategists.
Lighter-than-expected issuance has contributed to strong muni performance so far this year, they said.
"Some of the supply trends that we expected to play out this year have been quite obvious, although it is still too early to make broad generalizations," Barclays strategists said.
January supply in 2024-2025 was similar, but higher education issuance saw a "substantial drop" that was offset by increasing supply for utility, healthcare and pre-pay gas deals, they said.
New-issue calendar
The new-issue calendar is an estimated $12.636 billion, with 8.319 billion of negotiated deals on tap and $4.316 billion of competitives.
The Harris County Cultural Education Facilities Finance Corp. leads the negotiated calendar with $1.257 billion of revenue refunding bonds (Houston Methodist).
The competitive calendar is led by Washington with $1.298 billion of GOs in three series.
AAA scales
MMD's scale was little changed: 2.11% (-1) in 2027 and 2.11% (-1) in 2028. The five-year was 2.18% (-1), the 10-year was 2.60% (unch) and the 30-year was 4.29% (unch) at 3 p.m.
The ICE AAA yield curve was unchanged: 2.14% in 2027 and 2.12% in 2028. The five-year was at 2.14%, the 10-year was at 2.60% and the 30-year was at 4.22% at 4 p.m.
The S&P Global Market Intelligence municipal curve was unchanged: The one-year was at 2.11% in 2027 and 2.12% in 2028. The five-year was at 2.19%, the 10-year was at 2.59% and the 30-year yield was at 4.24% at 3 p.m.
Bloomberg BVAL was unchanged: 2.14% in 2027 and 2.11% in 2028. The five-year at 2.16%, the 10-year at 2.58% and the 30-year at 4.14% at 4 p.m.
U.S. Treasuries were weaker.
The two-year UST was yielding 3.497% (+5), the three-year was at 3.66% (+4), the five-year at 3.754% (+3), the 10-year at 4.205% (+2), the 20-year at 4.794% (+1) and the 30-year at 4.854% (+1) near the close.
Primary to come
The Harris County Cultural Education Facilities Finance Corp. (/AA/AA/) is set to price Tuesday $1.257 billion of revenue refunding bonds (Houston Methodist), Series 2026A. BofA Securities.
The
The California Department of Water Resources (Aa1/AA+//) is set to price Tuesday $552.745 million of Central Valley Project Water System revenue bonds, 2026 Series A. Barclays.
Wisconsin is set to price Tuesday $550 million of GO refunding bonds, consisting of $450 million of Series 2026-1 bonds and $100 million of Series 2027-1 forward-delivery bonds. Wells Fargo.
The California Municipal Finance Authority is set to price $383.576 million of Series 2026-1 municipal certificates, consisting of $327.957 million of Class A-1 bonds, $46.509 million of Class A-2 bonds and $9.11 million of subordinate Class B bonds. J.P. Morgan.
The Massachusetts Development Finance Agency (/BBB-//) is set to price Wednesday $372.74 million of revenue bonds (Middlesex Sustainable Energy, consisting of $165.01 million of tax-exempt Series A bonds and $207.73 million of taxable Series B bonds. BofA Securities.
The Arizona Board of Regents (Aa3/AA-//) is set to price Tuesday $231.43 million of University of Arizona System revenue refunding bonds, Series 2026A. J.P. Morgan.
The University of Oregon (Aa2/AA-//) is set to price Thursday $205.8 million of general revenue and refunding bonds, Series 2026A. BofA Securities.
Ohio (Aaa/AAA/AAA/) is set to price Tuesday $200 million of infrastructure improvement GOs, Series 2026 A. Stifel.
The Ontario Public Financing Authority, California, (/AA-/AA-/) is set to price Tuesday $196.34 million of lease revenue bonds, consisting of $161.405 million of taxable Series 2026A bonds and $34.935 million of tax-exempt 2026B bonds. Ramirez.
The Colorado Housing and Finance Authority (Aaa/AAA//) is set to price Wednesday $194.44 million of taxable single-family mortgage bonds, Class I bonds, 2026 Series C-1. RBC Capital Markets.
The Richardson Independent School District, Texas, (Aaa/AAA//) is set to price Thursday $183.105 million of PSF-insured unlimited tax refunding bonds. FHN Financial.
The Round Rock Independent School District, Texas, (Aaa///AAA/) is set to price Wednesday $180.225 million of PSF-insured unlimited tax school building bonds, Series 2026A. J.P. Morgan.
The Build NYC Resource Corp. (/BB//) is set to price Tuesday $167.915 million of tax-exempt revenue bonds (261 Walton Facility LLC–Zeta Charter Schools, Inc. Project), consisting of $81.075 million of Series 2026A and $86.84 million of Series 2026B. Baird.
The Public Finance Authority (Aa1///) is set to price Tuesday $136 million of municipal certificates, Series 2026-1 Class A. J.P. Morgan.
The Alvin Independent School District, Texas, (Aaa//AAA/) is set to price Tuesday $132.89 million of PSF-insured unlimited tax refunding bonds. SAMCO Capital Markets.
The Public Finance Authority (//A-/) Thursday $132.385 million of tax-exempt revenue bonds (Maniilaq Association Employee Housing Project). Goldman Sachs.
The Unified Government of Wyandotte County/Kansas City, Kansas, is set to price Thursday $119.275 million of sales tax special obligation revenue bonds (Northwest Speedway Star Bond District Project). Piper Sandler.
The Columbus City School District Board of Education (Aa1/AA+//) is set to price Wednesday $100.65 million of various purpose refunding bonds, Series 2026 A. Stifel.
Competitive
Washington (Aaa/AA+/AA+/) is set to sell $540.895 million of various purpose GOs, Series 2026C, Bid Group 2, at 10:45 a.m. Eastern Tuesday; $299.37 million of motor vehicle fuel tax and vehicle related fees GOs, Series 2026D, at 11:45 a.m. Tuesday; $236.45 million of various purpose GOs, Series 2026C, Bid Group 1, at 10:15 a.m. Tuesday; and $221.235 million of taxable GOs, Series 2026T-2, at 11:15 a.m. on Tuesday.
The Las Vegas Valley Water District, Nevada, (Aa1/AA+//) is set to sell $343.31 million of GO water refunding bonds, Series 2026A, at 10:45 a.m. Wednesday.
Portland Public Schools, Oregon, (Aa1///) is set to sell $273.315 million of GOs, Bidding Group 3, at noon Tuesday; $232.37 million of GOs, Bidding Group 2, at 11:30 a.m. Tuesday; and $154.315 million of GOs, Bidding Group 1, at 11 a.m. on Tuesday.
Nevada (Aa1/AA+/AA+/) is set to sell $227.745 million of GO capital improvement, historic preservation and open space bonds, Series 2026A, at noon Tuesday; and $102.445 million of GO capital improvement bonds, Series 2026B, at 12:30 p.m. Tuesday.
Virginia Beach, Virginia, is set to sell $146.425 million of GO public improvement bonds, Series 2026A, at 10:30 a.m. Thursday.
Danbury, Connecticut, is set to sell $139.605 million of GO bond anticipation notes at 11 a.m. Tuesday.
Memphis, Tennessee, is set to sell $137.705 million of general improvement bonds at 10:30 a.m. Wednesday.
The University System of Maryland is set to sell $104.125 million of auxiliary facility and tuition revenue bonds, Series 2026A, at 10:45 a.m. Wednesday.
