Municipals are changed little more than a basis point or two, while U.S. Treasuries cheapened slightly and equities ended up.
The two-year muni-UST ratio Wednesday was at 69%, the five-year at 65%, the 10-year at 67% and the 30-year at 87%, according to Municipal Market Data's 3 p.m. EDT read. ICE Data Services had the two-year at 69%, the five-year at 66%, the 10-year at 67% and the 30-year at 87% at a 4 p.m. read.
The Investment Company Institute Wednesday reported outflows of $1.042 billion for the week ending Nov. 12, following $650 million of inflows the previous week. This differs from the $405.3 million of inflows into muni mutual funds, as reported by LSEG Lipper, over the same time period.
Exchange-traded funds saw inflows of $2.735 billion after $984 million of inflows the week prior, per ICI data.
The muni market is feeling a little bit more "patient," said Jeff Timlin, a partner at Sage Advisory.
"We had a nice run up here. The back end of the curve is still attractive, but that's probably going to take a little bit more time to correct. The holidays [are] creeping up. The new-issue calendar is normal for this week. People are going to pay attention to that to see how the market direction goes," he said.
While cash is still flowing into the muni market, participants are taking a "wait and see approach," but deploying it wherever it seems appropriate in the curve, he said.
The market is in a bit of a lull right now as it braces for a deluge of economic data, which could spark volatility, according to Timlin.
"With the government now open, we're set to get a regular flow of data," said Cooper Howard, a fixed income strategist at Charles Schwab. "We expect the data that we missed to show much of the same — the economy is holding up ok, the labor market is slowing, and inflation is stuck. This should keep the Fed on track to slowly lower rates. However, if the data shows something different, yields will likely be volatile."
Not all missing data will be released, though. While the delayed September job report comes out Thursday, the Bureau of Labor Statistics will not release the October nonfarm payrolls report.
Instead, the October payroll data will be included with the November jobs report, which will be released later than normal: on Tuesday, Dec. 16. This comes after the December Federal Open Market Committee meeting, which lowers the probability of a rate cut, said Morgan Stanley strategists.
"The FOMC is keying off of the unemployment rate, and that data will not be updated beyond September before the FOMC meeting," they said. "Payrolls alone, unless they move extremely sharply, do not tell the FOMC whether the labor market is easing or tightening, and an easing labor market is the key argument for a December rate cut.
A rate cut could still happen if "jobless claims, retail sales, and anecdotes about Black Friday spending show enough weakness, or if the September unemployment rate deteriorates more than we expect," Morgan Stanley strategists said.
Wednesday saw the release of September's FOMC meeting minutes.
"The primary takeaway from the Fed minutes is [that] support for a December rate cut is tepid at best. But we knew that," said FHN Financial Chief Economist Chris Low.
For December, "several" participants at the previous meeting "were already leaning toward a cut," he said, while "many" expected no move in December.
"Many is bigger than several," Low noted. "But remember, seven regional presidents don't vote, and we know from speeches and interviews the presidents are skewing much more hawkish than the board. Among this year's voters, we count five likely to support a cut and five likely opposed, leaving Powell and Williams as the deciding voters."
"Those who thought a December rate cut could be appropriate were still in the majority," according to Priscilla Thiagamoorthy, senior economist at BMO.
Still, she said, "A very divided Fed has a tough decision to make, with just weeks before the next meeting and a lack of economic data to mull over."
"The latest FOMC minutes reveal a divided committee, grappling with differing views on the neutral rate, the interplay between cyclical and structural labor market dynamics, and the extent of inflation risks," said Seema Shah, chief global strategist at Principal Asset Management. "Without supportive jobs data to strengthen the dovish argument, the hawks will likely dominate the December meeting, resulting in a pause."
But a pause "could prove misguided," she said, noting alternative economic indicators suggest "a persistently soft growth path, while subdued consumer sentiment underscores concerns about job security."
Of course, a January ease would mean a pause wasn't "a critical misstep," Shah said.
Soft labor market conditions are "not recessionary, giving the Fed breathing space to reassess the economic backdrop and act decisively before risks escalate," she said.
Muni performance
Munis are seeing gains in November and year-to-date. Investment-grade munis are seeing gains of 0.21% month-to-date and 4.13% YTD, and high-yield munis are showing positive returns of 0.24% MTD and 4.72% MTD.
HY munis are significantly trailing IG munis, primarily due to underperformance in sectors such as transportation and tobacco, said J.P. Morgan strategists led by Peter DeGroot.
"The transportation sector has seen significant performance degradation, largely resulting from ongoing credit issues with Brightline. Issues in the tobacco sector have been more systemic," he said.
Spreads between the HY and IG sectors are expected to "vacillate" with fund flows, but HY munis should ultimately narrow the gap with IG in the long term, J.P. Morgan strategists said.
Muni performance should be favorable through yearend, said Cooper Howard, a fixed income strategist at Charles Schwab.
Issuance is likely to slow as the end of the year approaches while demand should continue to remain strong, he said.
Both of these factors should "provide strong tailwinds for performance through the end of the year," Howard said.
New-issue market
In the primary market Wednesday, Barclays priced for the New York City Municipal Water Finance Authority (Aa1/AA+/AA+/) $1.03 billion of water and sewer system second general resolution refunding revenue bonds, Fiscal 2026 Series AA. The first tranche, $600 million of Series AA-1, saw 5s of 6/2055 at 4.54% and 5.25s of 2055 at 4.49%, callable 12/15/2035.
The second tranche, $430.29 million of Series AA-2, saw 5s of 6/2031 at 2.50%, 5s of 2035 at 2.87%, 5s of 2040 at 3.47%, 5s of 2044 at 4.04% and 5s of 2050 at 4.42%, callable 12/15/2035.
BofA Securities priced for the University of Pittsburgh Commonwealth System of Higher Education (Aa1/AA+//) $200 million of university capital project bonds, Series A of 2025, with 5s of 2/2036 at 3.01%, noncall.
Barclays priced for the issuer $177 million of Pitt asset notes — tax-exempt higher education registered series of 2025, with 5s of 4/2032 at 2.68%, callable 2/15/2032.
BofA Securities priced for the East Baton Rouge Sewerage Commission (Aa3/AA-//) $122.34 million of revenue refunding bonds, Series 2025A, with 5s of 2/2027 at 2.75%, 5s of 2030 at 2.66%, 5s of 2035 at 2.99% and 5s of 2039 at 3.54%, callable 8/1/2035.
In the competitive market, Fulton County, Georgia, (Aa2/AA/AA/) sold $192.05 million of water and sewerage revenue refunding bonds, to BofA Securities, with 5s of 1/2027 at 2.55%, 5s of 2030 at 2.50% and 5s of 2035 at 2.73%, noncall.
AAA scales
MMD's scale was little changed: 2.52% (unch) in 2026 and 2.46% (unch) in 2027. The five-year was 2.41% (unch), the 10-year was 2.75% (unch) and the 30-year was 4.15% (+1) at 3 p.m.
The ICE AAA yield curve was narrowly mixed: 2.52% (-2) in 2026 and 2.46% (-1) in 2027. The five-year was at 2.43% (+2), the 10-year was at 2.77% (+1) and the 30-year was at 4.11% (unch) at 4 p.m.
The S&P Global Market Intelligence municipal curve was bumped a basis point: The one-year was at 2.51% (-1) in 2025 and 2.45% (-1) in 2026. The five-year was at 2.40% (-1), the 10-year was at 2.74% (-1) and the 30-year yield was at 4.12% (unch) at 3 p.m.
Bloomberg BVAL was little changed: 2.51% (unch) in 2025 and 2.46% (unch) in 2026. The five-year at 2.37% (unch), the 10-year at 2.70% (unch) and the 30-year at 4.05% (+1) at 4 p.m.
Treasuries were slightly weaker.
The two-year UST was yielding 3.59% (+2), the three-year was at 3.585% (+2), the five-year at 3.706% (+2), the 10-year at 4.13% (+2), the 20-year at 4.719% (+2) and the 30-year at 4.751% (+2) near the close.
Primary to come
The Los Angeles Community College District (Aaa/AA+//) is set to price Thursday $300 million of 2016 Election GO refunding bonds, Series F. BofA Securities.
The Medical University Hospital Authority (Aa2/AA+//) is set to price Thursday $260.395 million of FHA-insured hospital mortgage revenue bonds (Indian Land Project). BofA Securities.
Hamilton County, Ohio, is set to price Thursday $207 million of sales tax bond anticipation notes. Subordinate Series 2025 (Paycor Stadium Improvement Project). Stifel, Nicolaus & Co.
The Massachusetts Development Finance Agency (//BBB-/) is set to price Thursday $181.57 million of Tufts Medicine issue revenue bonds, consisting of $30.05 million of Series F bonds and $151.52 million of Series G taxable bonds. BofA Securities.
The Grand Rapids Economic Development Corp. is set to price Thursday $174.83 million of limited obligation revenue bonds (Beacon Hill at Eastgate Project), consisting of $107.83 million of Series A, $12.25 million of Series B-1, $15.75 million of Series B-2 and $39 million of Series B-3. Ziegler.
The Helena High School District, Montana, (A1/AA//) is set to price Thursday $130 million of GO school building bonds. D.A. Davidson.
The Public Finance Authority is set to price Thursday $116.915 million of tax-exempt student housing revenue bonds (PRG — Oxford Properties LLC), Series 2025A. Raymond James.
The Golden State Connect Authority is set to price Thursday $106 million of telecommunications revenue bonds (Broadband Project). KeyBanc Capital Markets.
Competitive
The Davis School District Board of Education, Utah, (Aaa///) is set to sell $100 million of GOs, Series 2025B, at 11:30 a.m. Thursday.
