Munis were firmer out long Tuesday, as USTs richened 10 years and in and equities ended mixed.
The two-year muni-UST ratio Tuesday was at 67%, the five-year at 65%, the 10-year at 70% 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 67%, the five-year at 64%, the 10-year at 70% and the 30-year at 90% at a 4 p.m. read.
Munis continued their underperformance last week for the second consecutive week, led once again by front-end weakness, said Birch Creek strategists.
The front end saw 2026-2029 maturities experience a two to five basis point cut, while the rest of the curve saw yields bumped one to five basis points, said Jason Wong, vice president of municipals at AmeriVet Securities.
Due to these cuts on the front end, munis are seeing flat monthly returns on the short end, while the long end continues to show strength, with gains of about 0.84%, he said.
Overall, munis are seeing gains of 0.53%, pushing year-to-date returns to 3.19%, a change from July when munis saw losses of 0.55% for the year, Wong said.
Ahead of a $14 billion new-issue calendar last week, accounts were "cautious" and activity remained light through Thursday, with bid wanteds down 9% for the week and customer purchases falling 8%, Birch Creek strategists said, citing J.P. Morgan data.
New issues largely performed well as "underwriters released scales with generous pricing terms," they said.
"A $543mm Aa1/AAA MA Rails deal saw most maturities bumped 3-4bps after being upsized by 50mm, while a $361mm Aa1/AAA Columbus GO deal concentrated down the curve saw its 10y bonds bumped 7bps," Birch Creek strategists said.
New York City GOs, one of the most widely held names in the muni market, saw its retail order period "come up light" with $300 million in orders for its $1.5 billion deal, they said.
However, for the institutional order period, underwriters revised pricing wider, "cutting the 30y by 7bps to +45, which ultimately led to 2x subscriptions in that maturity," they said.
Investors added $966 million to municipal bond mutual funds in the week ended Wednesday, following $1.084 billion of inflows the prior week, according to LSEG Lipper data. This is the seventh week of inflows over the last eight weeks.
Inflows have been a "distinctive and positive aspect" of the muni market, said Sudip Mukherjee, fixed income strategist at UBS Global Wealth Management.
"Continued flows should help offset potentially weaker technicals in the near term, as supply increases [and] redemption demand falls, he said.
As the technical picture tends to turn "more favorable" during November and December, Birch Creek strategists believe "the wider new issue concessions brought about via the heavy new issue calendar will likely be rewarded" by investors taking advantage.
In the primary market Tuesday, Goldman Sachs preliminary priced for Salt River Project Agricultural Improvement and Power District, Arizona, (Aa1/AA+//) $727.735 million of electric system revenue bonds, 2025 Series C, with 5s of 1/2043 at 3.98%, 5s of 2045 at 4.13%, 5s of 2051 at 4.41% and 5.25s of 2055 at 4.40%, callable 1/1/2036.
Ramirez priced for the Ohio State Treasurer (Aa1/AA+/AA+/) $196.99 million of capital facilities lease appropriation bonds, Series 2025B, with 5s of 10/2026 at 2.50%, 5s of 2030 at 2.47%, 5s of 2035 at 2.99%, 5s of 2040 at 3.61% and 5s of 2045 at 4.13%, callable 10/1/2034.
BofA Securities priced for American Municipal Power (A1/A//) $135 million of combined hydroelectric projects revenue refunding bonds, Series 2025A, with 5s of 2/2027 at 2.62%, 5s of 2030 at 2.60%, 5s of 2035 at 3.04%, 5s of 2040 at 3.78%, 5s of 2045 at 4.29% and 5s of 2046 at 4.36%, callable 2/15/2035.
In the competitive market, the Indiana Finance Authority (/AAA/AAA/) sold $236.49 million of Indiana State Revolving Fund program green bonds, to J.P. Morgan, with 5s of 2/2027 at 2.43%, 5s of 2030 at 2.38%, 5s of 2035 at 2.82%, 5s of 2040 at 3.54%, and 5s of 2045 at 4.05%, callable 2/1/2035.
The Palo Alto Unified School District, California (/AAA//) sold $190 million of GOs, to BofA Securities, with 5s of 8/2026 at 2.04%, 5s of 2030 at 1.92% and 5s of 2032 at 2.12%, noncall.
AAA scales
MMD's scale was bumped up to three basis points: 2.40% (unch) in 2026 and 2.33% (-1) in 2027. The five-year was 2.34% (-1), the 10-year was 2.84% (-2) and the 30-year was 4.16% (-1) at 3 p.m.
The ICE AAA yield curve was mixed: 2.43% (+2) in 2026 and 2.34% (+2) in 2027. The five-year was at 2.34% (+1), the 10-year was at 2.84% (-1) and the 30-year was at 4.16% (unch) at 4 p.m.
The S&P Global Market Intelligence municipal curve was bumped two basis points two years and out: The one-year was at 2.40% (unch) in 2025 and 2.32% (-2) in 2026. The five-year was at 2.32% (-2), the 10-year was at 2.84% (-2) and the 30-year yield was at 4.15% (-2) at 3 p.m.
Bloomberg BVAL was bumped up to three basis points: 2.34% (unch) in 2025 and 2.31% (unch) in 2026. The five-year at 2.26% (-1), the 10-year at 2.82% (-1) and the 30-year at 4.13% (-3) at 4 p.m.
Treasuries were slightly firmer.
The two-year UST was yielding 3.496% (-3), the three-year was at 3.474% (-4), the five-year at 3.596% (-3), the 10-year at 4.018% (-2), the 20-year at 4.579% (flat) and the 30-year at 4.616% (flat) near the close.
Primary to come
CommonSpirit Health (A3/A-/A-/) is set to price Thursday $2.336 billion of taxable corporate CUSIPs, Series 2025A. BofA Securities.
New York City (Aa2/AA/AA/AA+/) is set to price Wednesday $1.75 billion of taxable GOs, Fiscal 2026 Series E, consisting of $1.29 billion of Subseries E-1 and $460 million of Subseries E-2. Wells Fargo Bank.
The Dormitory Authority of the State of New York (/AA+/AA+/) is set to price Thursday $1.599 billion of state sales tax revenue refunding bonds, Series 2025A. Jefferies
The JobsOhio Beverage System (Aa2/AA+//) is set to price Thursday $596.93 million of statewide senior lien liquor profits, consisting of $496.69 million of tax-exempt revenue refunding and new-money bonds, Series 2025A, and $100.24 million of taxable revenue refunding bonds, Series 2025B. Goldman Sachs.
The Washington Health Care Facilities Authority (A3/A-/A-/) is set to price on behalf of CommonSpirit Health Thursday $518.76 million of revenue bonds, Series 2025A. BofA Securities.
The New York State Housing Finance Agency (Aa2///) is set to price Wednesday $503.745 million of affordable housing revenue sustainability bonds, consisting of $110.28 million of 2025 Series D-1 and $393.465 million of 2025 Series D-2. BofA Securities.
The Colorado Health Care Facilities Authority (A3/A-/A-/) is set to price on behalf of CommonSpirit Health Thursday $495.975 million of revenue bonds, Series 2025A. BofA Securities.
Chicago (/A/A/A/) is set to price Wednesday $429.75 million of Chicago Midway Airport bonds, consisting of $99.93 million of AMT bonds and $329.82 million of tax-exempts. BofA Securities.
The Pennsylvania Turnpike Commission (A2/A+/A/A+/) is set to price Wednesday $304.3 million of turnpike subordinate revenue refunding bonds, First Series of 2025. Raymond James.
The Indianapolis Local Public Improvement Bond Bank (Aa3/AA+//) and is set to price Wednesday $300.265 million of refunding bonds, Series 2025D. Stifel.
The Rhode Island Health and Educational Building Corp. (/AA/) is set to price Wednesday $210.74 million of student housing revenue bonds (PRG – RI Properties LLC), consisting of $193.66 million of Series 2025A and $17.08 million of Series 2025B. Raymond James.
The Delaware Economic Development Authority (Baa3/BBB-//) is set to price Thursday $190 million of exempt non-AMT facility refunding revenue bonds (NRF Energy Project), Series 2020A. KeyBanc Capital Markets.
The Pearland Independent School District, Texas, is set to price Thursday $138.425 million of unlimited tax school building and refunding bonds. Piper Sandler.
The Indianapolis Local Public Improvement Bond Bank (Aa2/AA+//) is set to price Wednesday $127.48 million of refunding bonds, Series 2025C. Stifel.
