Municipals were firmer on the short end and in the belly of the curve, while U.S. Treasuries saw losses, and equities ended down.
Markets are "tilting to a risk-off posture as participants brace for the chance of Trump tariff-sparked turbulence in the coming hours and days," said José Torres, senior economist at Interactive Brokers.
President Donald Trump sent out the first wave of promised letters Monday, threatening to impose higher tariffs on several countries: 25% tariffs on goods from Japan, South Korea, Malaysia, and Kazakhstan; 30% tariffs on South Africa; and 40% tariffs on Laos and Myanmar.
Additionally, other countries may be in the crosshairs, as Trump has threatened "a 10% import tax on any nation uniting with the 'Anti-American' agenda of BRICS, the intergovernmental organization led by Brazil, Russia, India, China, and South Africa," Torres said.
Between now and Wednesday, July 9, additional letters will be sent out.
And while "the July 9 deadline marking the 90-day break of Trump's reciprocal levies announced in early April is approaching ... there will be some additional flexibility since the duties are scheduled to be implemented on August 1," Torres said.
The White House plans to announce "wide-ranging trade deals" imminently as Treasury Secretary Scott Bessent signals the potential for closed agreements with 18 top partners, he noted.
Bessent "told CNBC he expects several frameworks to be publicly declared in the next 48 hours, and I believe equity and fixed-income assets alike are poised to rally following a few settlements, as each incremental accord removes a cloud of uncertainty from the economic landscape," Torres said.
Last week, munis saw "mixed results," with the front-end being bumped and long-end seeing some cuts, said Jason Wong, vice president of municipals at AmeriVet Securities
With UST yields rising and munis, for the most part, remaining unchanged, munis outperformed USTs as the 10-year muni-to-Treasury ratio was 73.8% last week compared to 76.12% the prior week, he said.
The two-year muni-UST ratio Monday was at 64%, the five-year at 65%, the 10-year at 73% and the 30-year at 92%, according to Municipal Market Data's 3 p.m. ET read. ICE Data Services had the two-year at 63%, the five-year at 67%, the 10-year at 73% and the 30-year at 932% at a 4 p.m. read.
June's nonfarm payroll report on Friday had a significant impact on the Treasury market, while the muni market was relatively steady.
A stronger-than-expected Jobs report for June made "the odds of a July rate cut an all but off the table scenario," Wong said.
"The probability of a rate cut in September also lowered to a 75% chance as we are in an interesting pocket of time in which the Fed Chair Jerome Powell will continue his wait-and-see approach as President Trump will continue to push for a rate cut," he said.
Last week included President Donald Trump signing into law the "One Big Beautiful Bill," his sweeping tax and spending cuts plan.
Munis may have "dodged a bullet" with the bill, especially as the idea of eliminating the tax exemption had floated around to offset the bill's other tax cuts, said Daryl Clements, a municipal portfolio manager at AllianceBernstein.
"The idea didn't gain traction and, based on several important reasons, we're convinced wholesale elimination is on hold indefinitely," he said.
The bill, though, "has several provisions that will impact the finances of municipal bond issuers, and at least two provisions that could have an immediate effect on municipal bond investors," said Pat Luby, head of municipal strategy at CreditSights.
These provisions include "the change in the excise tax imposed on the net investment income of certain private university and college endowments and changes in Medicaid and health care spending," he said.
Two important changes will also immediately impact muni investors: the expansion of the SALT deduction and the extension of the current status quo of the individual AMT, Luby said.
For the latter, there may be an "immediate tightening of AMT bond spreads and a modest widening (and underperformance) for non-AMT airport bonds," he said.
AAA scales
MMD's scale was bumped up to four basis points: The one-year was at 2.48% (-4) and 2.49% (-4) in two years. The five-year was at 2.57% (-4), the 10-year at 3.21% (-2) and the 30-year at 4.54% (unch) at 3 p.m.
The ICE AAA yield curve was bumped up to three basis points: 2.53% (-2) in 2026 and 2.45% (-3) in 2027. The five-year was at 2.64% (-1), the 10-year was at 3.16% (-1) and the 30-year was at 4.49% (unch) at 4 p.m.
The S&P Global Market Intelligence municipal curve was bumped up to three basis points: The one-year was at 2.49% (-3) in 2025 and 2.50% (-3) in 2026. The five-year was at 2.58% (-3), the 10-year was at 3.20% (-2) and the 30-year yield was at 4.53% (unch) at 4 p.m.
Bloomberg BVAL was bumped up to three basis points: 2.52% (-3) in 2025 and 2.53% (-3) in 2026. The five-year at 2.63% (-2), the 10-year at 3.18% (-1) and the 30-year at 4.50% (unch) at 4 p.m.
Treasuries saw losses.
The two-year UST was yielding 3.898% (+2), the three-year was at 3.856% (+1), the five-year at 3.958% (+2), the 10-year at 4.384% (+4), the 20-year at 4.922% (+6) and the 30-year at 4.92% (+6) just after the close.
Primary to come
The California State University Trustees (Aa2/AA-//) are set to price Thursday $1.727 billion of systemwide revenue bonds, consisting of $1.613 million of Series A tax-exempt bonds and $113.935 million of Series B taxable bonds. Goldman Sachs.
The Washington Metropolitan Area Transit Authority (/AA//AA/) is set to price Wednesday $653.5 million of Series 2025A second lien dedicated revenue bonds. Barclays.
The Spring Independent School District, Texas, (Aaa/AAA//) is set to price Thursday $590.865 million of PSF-insured unlimited tax school building and refunding bonds, Siebert Williams Shank.
The Mesquite Independent School District, Texas, (/AAA/AAA/) is set to price Wednesday $496.565 million of PSF-insured unlimited tax school building and refunding bonds. Cabrera Capital Markets.
The Southern California Public Power Authority (Aa2//AA-/) is set to price Wednesday $428.87 million of Southern Transmission System Renewal Project revenue bonds, consisting of $214.725 million of Series 2025-1 fixed rate bonds and $214.145 million of Series 2025-2 fixed tender bonds - term rate mode. RBC Capital Markets.
The Waller Independent School District, Texas, (Aaa/AAA//) is set to price Wednesday $398.82 million of PSF-insured unlimited tax school building bonds. Jefferies.
Pinal County, Arizona, (/AA//) is set to price Tuesday $335.785 million of BAM-insured pledged revenue obligations, consisting of $40.87 million of tax-exempt refunding bonds, $186.83 million of tax-exempt bonds and $108.085 million of taxable bonds. Stifel.
The Texas Public Finance Authority (/AAA/AAA/) is set to price Wednesday $300 million of taxable GO refunding bonds. Raymond James.
The Massachusetts Development Finance Agency is set to price Tuesday $250.03 million of Series A-1 Care Communities issue senior living revenue bonds. D.A. Davidson.
The Miami Beach Redevelopment Agency, Florida, (A1/AA//) is set to price Tuesday $238.96 million of City Center/Historic Convention Village tax increment revenue refunding bonds, insured by Assured Guaranty. BofA Securities.
Collin County, Texas, is set to price Wednesday a $229.85 million deal, consisting of $221.85 million of limited tax permanent improvement and refunding bonds (Aaa/AAA//) and $8 million of tax notes (/AAA//). Jefferies.
The Sherman Independent School District, Texas, (Aaa/AAA//) is set to price Tuesday $226.29 million of PSF-insured unlimited tax school building bonds. Raymond James.
The Hampton Roads Sanitation District, Virginia, is set to price Tuesday $223.995 million of subordinate wastewater revenue bonds, Series 2025A. J.P. Morgan.
The Lubbock Independent School District, Texas, (Aaa/AAA//) is set to price Wednesday $222.625 million of PSF-insured unlimited tax school building bonds. RBC Capital Markets.
The Local Building Authority of Alpine School District, Utah, (Aa2//AA+/) is set to price Thursday $201.045 million of West School District lease revenue bonds. Morgan Stanley.
The Flour Bluff Independent School District, Texas, (/AAA//) is set to price Thursday $193.49 million of PSF-insured unlimited tax school building bonds Ramirez.
The Tomball Independent School District, Texas, (Aaa/AAA//) is set to price Tuesday $191.4 million of PSF-insured unlimited tax school building bonds. Raymond James.
The Public Finance Authority is set to price $175 million of nonrated tax-exempt pooled securities, Series 2025-1 Class A certificates. J.P. Morgan.
The Nevada Housing Division (/AA+//) is set to price Wednesday $158.835 million of senior single-family mortgage revenue bonds, consisting of $60 million of non-AMT Series C bonds and $98.835 million of taxable Series D bonds. J.P. Morgan.
The Foothill-De Anza Community College District, California, (Aaa/AAA//) is set to price Wednesday $151 million of Election of 2020 GOs, Series D. Piper Sandler.
The Marble Falls Independent School District, Texas, (/AAA//) is set to price Tuesday $150.57 million of PSF-insured unlimited tax school building bonds, RBC Capital Markets.
The Public Finance Authority is set to price Thursday $150.212 million of Cuyahoga River Capital Portfolio municipal certificates, Series 20205-1 Class A. HilltopSecurities.
The Palm Beach County Health Facilities Authority (/BBB-/BBB/) is set to price Wednesday $148.775 million of Jupiter Medical Center Project hospital revenue bonds. RBC Capital Markets.
The Anna Independent School District, Texas, (/AAA//) is set to price Wednesday $135 million of PSF-insured unlimited tax school building bonds. BOK Financial Securities.
The Rhode Island Health and Education Building Corp. (/AA//) is set to price Tuesday $103.43 million of North Providence issue public schools revenue bond financing program revenue bonds, Series 2025 C, insured Assured Guaranty. Janney.
El Paso, Texas, (/AA//AA+/) is set to price Thursday $102.565 million of GO refunding bonds. Jefferies.
Redmond, Oregon, (Aa2///) is set to price Tuesday $101.915 million of airport expansion projects full faith and credit bonds, consisting of $96.885 million of AMT Series A bonds and $5.03 million of taxable Series B bonds. Morgan Stanley.
Competitive
The Livonia Central School District, New York, is set to sell $366.076 million of bond anticipation notes at 10:30 a.m. Tuesday.
The Broward County School District, Florida, is set to sell $250 million of tax anticipation notes at 11 a.m. Tuesday.
Miami-Dade County, Florida, (Aa2/AA//) is set to sell $242.195 million of BuildingBetter Communities Program GO refunding bonds, Series 2025A, at 9:30 a.m. Thursday.
The Maryland Economic Development Corp. (//AA+/) is set to sell $212.92 million of Series A and Series B lease revenue bonds at 10:30 a.m. Tuesday.
San Jose, California, (Aa1//AAA/) is set to sell $209.57 million of Series A and Series B disaster preparedness, public safety and infrastructure GOs at noon Wednesday.
Frisco, Texas, is set to sell $147.29 million of GO refunding and improvement bonds at 10:45 a.m. Wednesday.
Washington County, Oregon, (Aaa///) is set to sell $142 million of full faith and credit obligations at noon Wednesday.
The Greater Fall River Regional Vocational Technical School District, Massachusetts, is set to sell $104.995 million of state-qualified GO school project loan chapter 70B bonds at 11 a.m. Wednesday.
The Athens Independent School District, Texas, is set to sell $100 million of PSF-insured unlimited tax school building bonds at 11 a.m. Tuesday.
