Municipals were a touch firmer out long Wednesday, as U.S. Treasuries were little changed. Equities ended up.
The two-year muni-UST ratio Wednesday was at 65%, the five-year at 62%, the 10-year at 70% and the 30-year at 89%, according to Municipal Market Data's 3 p.m. EDT read. ICE Data Services had the two-year at 65%, the five-year at 62%, the 10-year at 70% and the 30-year at 89% at a 4 p.m. read.
The Investment Company Institute Wednesday reported inflows of $527 million for the week ending Oct. 1, following $1.1 billion of inflows the previous week.
Exchange-traded funds saw inflows of $721 million after $145 million of outflows the week prior, per ICI data.
There remains a supply/demand imbalance in the muni market, which is impacted by varying supply and demand influences more than most other markets, said Jeff Timlin, a partner at Sage Advisory.
Some of it is just how cash flows "roll off" on a seasonal basis, with the majority of money rolling off in June, July and into August, he said.
"So you get these periods of mismatches between when the issuance comes and when the organic demand comes back into market, like now, [which] is typically a softer period," unless the new supply is supported by inflows, Timlin said.
October should be a "softer month" where demand may not be as robust as it has been; despite this, it doesn't take a lot of demand to keep the market rolling, he said.
So as all the deals get done, it leads to an orderly market, he said.
In the secondary market, a lot of the inventory that the broker-dealers built up over the summer is coming down, so "we're well off the peaks of broker inventory," Timlin said.
They are getting a little bit firmer on their offerings, he noted.
"We've gone out to the market and tried to bid them back to certain levels, which we think is more fair. They're just like, 'No, we're good with the level.' And inventory is probably getting a little bit stale, but they're pretty confident that they'll be able to offload what they have," Timlin said.
The firmness is primarily in the "wings" on the curve, as the one- to five-year area of the curve is firm outside of the munis inside one year, he said.
Meanwhile, the five-year area is still strong as the big players are separately managed accounts in five to 10 years, Timlin said.
"That's remained fairly liquid in terms of how you want to look at the market, in terms of its support," he said.
From the 10-year spot out to 25 years, there is a noticeable malaise and lack of interest, with "not as big a buyer base there," Timlin said.
Interest picks up again 25 years and longer, as mutual funds, exchange-traded funds and longer-dated buyers traditionally are supporting that part of the curve very well, he said.
In the primary market Wednesday, J.P. Morgan preliminarily priced for New York City (Aa2/AA/AA/AA+/) $1.5 billion of GOs, Fiscal 2026 Series D, with 5s of 10/2027 at 2.47%, 5s of 2030 at 2.58%, 5s of 2035 at 3.25%, 5s of 2040 at 3.92%, 5s of 2045 at 4.39%, 5.25s of 2051 at 4.57% and 5s of 2055 at 4.66%, callable 10/1/2035.
Jefferies priced for the San Diego Unified School District $670 million of GOs. The first tranche, $296.16 million of Series C-3 Election of 2022 bonds (Aa2//AAA/AAA/) saw 5s of 7/2026 at 2.32% , 5s of 2046 at 4.07% and 5s of 2050 at 4.25%, callable 7/1/2035.
The second tranche, $216.215 million of Series I-3 Election of 2018 bonds (Aa2//AAA/AAA/), saw 5s of 7/2026 at 2.32%, 5s of 2034 at 2.33%, 5s of 2035 at 2.50%, 5s of 2040 at 3.41%, 5s of 2045 at 4.00%, 4.125s of 2050 at 4.42% and 5s of 2055 at 4.30%, callable 7/1/2035.
The third tranche, $92.5 million of Series P-2 Election of 2008 bonds (Aa2//AAA/AAA/), saw 5s of 7/2026 at 2.32%, 5s of 2034 at 2.33%, 5s of 2035 at 2.50%, 5s of 2040 at 3.41% and 5s of 2045 at 4.00%, callable 71/2035.
The fourth tranche, $25 million of Series I-2 Election of 2018 bonds (Aa2//AAA/AAA/), saw 5s of 7/2029 at 1.92%, 5s of 2030 at 1.94% and 5s of 2031 at 1.98%, noncall.
The fifth tranche, $10 million of Series C-2 Election of 2022 bonds (Aa2//AAA/AAA/), saw 5s of 7/2030 at 1.94% and 5s of 2032 at 2.13%, noncall.
The sixth tranche, $13.825 million of taxable Series C-1 Election of 2022 bonds (Aa2///), saw 4.1s of 1/2026 priced at par, noncall.
The seventh tranche, $8.785 million of taxable Series I-1 Election of 2018 bonds (Aa2///), saw 4.1s of 1/2026 priced at par, noncall.
The eighth tranche, $7.5 million of taxable Series P-1 Election of 2008 bonds (Aa2///), saw 4.1s of 1/2026 priced at par, noncall.
BofA Securities priced for Ohio (A3/A//) $185.495 million of hospital revenue bonds (University Hospitals Health System, Inc.), Series 2025A, with 5s of 1/2027 at 2.96%, 5s of 2030 at 2.95%, 5s of 2035 at 3.49% and 5s of 2036 at 3.64%, callable 1/15/2035.
Ramirez priced for the Fontana Public Facilities Financing Authority, California, (/AA-/) $133.195 million of lease revenue bonds, Series 2025A, with 5s of 11/2026 at 2.25%, 5s of 2030 at 2.18%, 5s of 2035 at 2.80%, 5s of 2040 at 3.55%, 5s of 2045 at 4.12%, 5s of 2050 at 4.40% and 5s of 2055 at 4.47%, callable 11/1/2035.
In the competitive market, the
The issuer also sold $345 million of consolidated transportation bonds, Series 2025B, to Morgan Stanley, with 5s of 10/2028 at 2.32%, 5s of 2030 at 2.395%, 5s of 2035 at 2.96% and 4s of 2040 at 3.91%, callable 10/1/2033.
Oklahoma County, Oklahoma, (Aa1//) sold $215 million of GO limited tax bonds, Series 2025, to BofA Securities, with 4s of 11/2028 at 2.47%, 5s of 2030 at 2.53%, 4s of 2035 at 3.22%, 4s of 2040 at 3.91%, and 4s of 2045 at 4.35%, callable 11/1/2035.
AAA scales
MMD's scale was bumped up to three basis points: 2.40% (unch) in 2026 and 2.32% (unch) in 2027. The five-year was 2.32% (unch), the 10-year was 2.88% (-3) and the 30-year was 4.19% (-2) at 3 p.m.
The ICE AAA yield curve was bumped up to a basis point: 2.38% (unch) in 2026 and 2.31% (unch) in 2027. The five-year was at 2.33% (unch), the 10-year was at 2.89% (-1) and the 30-year was at 4.22% (-1) at 4 p.m.
The S&P Global Market Intelligence municipal curve was bumped two basis points nine years and out: The one-year was at 2.40% (unch) in 2025 and 2.31% (unch) in 2026. The five-year was at 2.31% (unch), the 10-year was at 2.89% (-2) and the 30-year yield was at 4.19% (-2) at 3 p.m.
Bloomberg BVAL was bumped up to two basis points: 2.29% (unch) in 2025 and 2.26% (unch) in 2026. The five-year at 2.27% (-1), the 10-year at 2.86% (-2) and the 30-year at 4.19% (-2) at 4 p.m.
Treasuries were little changed.
The two-year UST was yielding 3.586% (+2), the three-year was at 3.601% (+2), the five-year at 3.723% (+2), the 10-year at 4.131% (+1), the 20-year at 4.685% (flat) and the 30-year at 4.723% (flat) near the close.
Primary to come
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 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 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.
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.
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.
