Municipals were steady Tuesday amid a heavy slate of new issues as U.S. Treasury yields fell slightly and equities ended down.
The two-year muni-UST ratio Tuesday was at 65%, the five-year at 63%, the 10-year at 71% 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 64%, the five-year at 62%, the 10-year at 70% and the 30-year at 89% at a 4 p.m. read.
Issuance this week is at a "healthy" $12.9 billion, said Matt Fabian, co-CEO and partner at Municipal Market Analytics.
"In fact, the vectors driving 2025's supply jump — materials and labor inflation, delayed/overdue projects coming back, growing responsibilities via climate change and federal retrenchment, and budget pressures leading to gimmicks — all remain live supply contributors," he said.
For the month overall, a heavy new-issue calendar is expected, which may lead the muni market to "move sideways" from a return perspective, said Daryl Clements, a portfolio manager at AllianceBernstein.
October net supply is expected to be +$21 billion, meaning "there will be $21 billion more in supply than coupons and maturities hitting the market," he said, noting this is not a bad thing, as it could lead to attractive, higher yields.
"Taking advantage of higher yields in October may benefit investors, as the technical backdrop is expected to become more favorable in November and December," Clements said.
The large issuance of munis this year, up 12.9% year-to-date, "disadvantaged" the asset class compared to other U.S. fixed income assets for a majority of 2025, said Pat Haskell, head of the municipal bond group at BlackRock.
"The additional supply was a drag on performance, but it also drove both absolute and relative valuations to historically attractive levels," he said.
While there has been recent market strength, prompted by a rally in interest rates, munis continue to offer value compared to fixed-income alternatives, Haskell said.
For investors looking for tax-advantaged income, munis deserve "careful consideration" due to a trio of factors: attractive yields, compelling case for duration and reduced policy risks, he said.
"We foresee demand for munis ticking up near-term spurred by positive performance, attractive valuations and moderating supply as policy-driven issuance wanes and issuers gain visibility into the path of monetary policy normalization," Haskell said.
The triple advantage for the asset class should lead to a "comfortable ride" for investors through year-end, he said.
Elsewhere, "the federal government is now in what could be an extended shutdown, amplifying headline risks and real threats to state and local governments (via federal employment and service cuts, health care reductions, direct aid cuts, accelerating administration tensions with blue states, etc.)," Fabian said.
While the weak/negative jobs data, among other factors, will continue to slow U.S. growth, "this is not a good reason for more confidence in longer bond prices and overtight spreads," he said.
Therefore, a material selloff may be unlikely, but so is a material rally, Fabian said.
In the primary market Tuesday, BofA Securities priced and repriced for
J.P. Morgan Securities held a one-day retail order for New York City's (Aa2/AA/AA/AA+/) $1.5 billion of GOs, Fiscal 2026 Series D, with 5s of 10/2027 at 2.50%, 5s of 2030 at 2.56%, 5s of 2035 at 3.23%, 5s of 2040 at 3.89%, 5s of 2045 at 4.35%, 5.25s of 2051 at 4.50% and 5s of 2055 at 4.59%, callable 10/1/2035.
Wells Fargo priced for the New Jersey Housing and Mortgage Finance Agency (/AA-//) $343.96 million of social multi-family revenue bonds. The first tranche, $116.665 million of non-AMT bonds, Series 2025A, saw all bonds priced at par: 2.8s of 5/2026, 2.8s of 11/2026, 3.05s of 5/2030, 3.1s of 11/2030, 3.75s of 5/2035, 3.80s of 11/2035, 4.45s of 11/2040, 4.8s of 11/2045, 4.9s of 11/2050, 4.95s of 11/2055 and 5s of 11/2060, callable 11/1/2033.
The second tranche, $227.295 million of non-AMT bonds, Series 2025B, saw all bonds priced at par: 2.95s of 11/2027 and 3.1s of 2030, noncall.
BofA Securities priced for General Authority of South Central Pennsylvania (Aa3//AA-/) $300 million of revenue bonds, (WellSpan Health Obligated Group) Series 2025A, with 5s of 6/2029 at 2.70% and 5s of 2032 at 3.00%, noncall.
RBC Capital Markets preliminarily priced for Columbus, Ohio, (Aaa/AAA/AAA/) $218.69 million of unlimited tax bonds, Series 2025A, with 5s of 10/2026 at 2.50%, 5s of 2030 at 2.47%, 5s of 2035 at 3.06%, 5s of 2040 at 3.69% and 5s of 2045 at 4.15%, callable 10/1/2035.
Goldman Sachs priced for Oklahoma Municipal Power Authority (/AA//) $269.49 million of power supply system revenue and refunding bonds, Series 2025A, with 5s of 1/2027 at 2.63%, 5s of 2031 at 2.66%, 5s of 2035 at 3.12%, 5s of 2040 at 3.91%, 5s of 2045 at 4.37%, 5.25s of 2051 at 4.54% and 5.25s of 2056 at 4.60%, callable 1/1/2036.
BofA Securities priced for Roanoke Economic Development Authority, Virginia (AA-/Aa3//) $148.705 million of hospital revenue bonds (Carilion Clinic Obligated Group), Series 2025A, with 5s of 7/2026 at 2.71%, 5s of 2030 at 2.70%, 5s of 2035 at 3.31% and 5s of 2037 at 3.59%, callable 7/1/2035.
In the competitive market, Jersey City, New Jersey, (A1///) sold $124.45 million of general improvement bonds to BofA Securities, with 4s of 10/2026 at 2.50%, 5s of 2030 at 2.49%, 4s of 2035 at 3.21% and 4s of 2040 at 3.81%, 10/1/2032.
AAA scales
MMD's scale was unchanged: 2.40% in 2026 and 2.32% in 2027. The five-year was 2.32%, the 10-year was 2.91% and the 30-year was 4.21% at 3 p.m.
The ICE AAA yield curve was bumped up to two basis points: 2.38% (-1) in 2026 and 2.31% (-2) in 2027. The five-year was at 2.33% (-2), the 10-year was at 2.90% (-2) and the 30-year was at 4.22% (unch) at 4 p.m.
The S&P Global Market Intelligence municipal curve was unchanged: The one-year was at 2.40% in 2025 and 2.31% in 2026. The five-year was at 2.31%, the 10-year was at 2.91% and the 30-year yield was at 4.21% at 3 p.m.
Bloomberg BVAL was unchanged: 2.30% in 2025 and 2.26% in 2026. The five-year at 2.28%, the 10-year at 2.88% and the 30-year at 4.21% at 4 p.m.
Treasuries were slightly firmer.
The two-year UST was yielding 3.571% (-2), the three-year was at 3.585% (-2), the five-year at 3.709% (-3), the 10-year at 4.13% (-2), the 20-year at 4.691% (-2) and the 30-year at 4.729% (-2) near the close.
Primary to come
The San Diego Unified School District is set to price Wednesday $670 million of GOs, consisting of $7.355 million of taxable Series P-1 Election of 2008 bonds (Aa2///), $92.645 million of Series P-2 Election of 2008 bonds (Aa2//AAA/AAA/), $11.115 million of taxable Series I-1 Election of 2018 bonds (Aa2///), $25 million of Series I-2 Election of 2018 bonds (Aa2//AAA/AAA/), $213.885 million of Series I-3 Election of 2018 bonds (Aa2//AAA/AAA/), $13.825 million of taxable Series C-1 Election of 2022 bonds (Aa2///), $10 million of Series C-2 Election of 2022 bonds (Aa2//AAA/AAA/), and $296.175 million of Series C-3 Election of 2022 bonds (Aa2//AAA/AAA/). Jefferies.
Massachusetts (Aa1/AAA//AAA/) is set to price Wednesday $493.2 million of commonwealth transportation fund revenue and refunding bonds, consisting of $325 million of Series R bonds and $168.2 million of Series 2025A bonds. J.P. Morgan.
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.
Ohio (A3/A//) is set to price Thursday $172.815 million of hospital revenue bonds (University Hospitals Health System, Inc.), Series 2025A. BofA Securities.
The Fontana Public Facilities Financing Authority, California, (/AA-//) is set to price Wednesday $135.205 million of lease revenue bonds, Series 2025A. Ramirez.
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.
Competitive
The Maryland Department of Transportation (Aa1/AAA/AA+/)
Oklahoma County, Oklahoma, (Aa1///) is set to sell $215 million of GO limited tax bonds at 9:30 a.m. Wednesday.
Broward County, Florida, (Aa1/AA+//) is set to sell $158.845 million of water and sewer utility revenue refunding bonds at 10:30 a.m. Wednesday.
Houston is set to sell $121 million of tax and revenue notes at 10 a.m. Wednesday.
Frank Gargano contributed to this story.
