Munis were little changed Monday as the new-issue market slows to a lackluster $1.154 billion this holiday-shortened week, with only two deals above $100 million on tap. U.S. Treasuries were slightly firmer and equities ended up.
The two-year muni-UST ratio Monday was at 70%, the five-year at 67%, the 10-year at 68% 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 70%, the five-year at 66%, the 10-year at 68% and the 30-year at 87% at a 4 p.m. read.
"We do not expect any major weakness to take hold as the new issue calendar is beginning to dwindle with only two non-holiday or non-Federal Reserve weeks left in the year," said Birch Creek strategists.
Additionally, December reinvestment cash is set to hit, and there seems to be "ample demand at adjusted levels just a few basis points wider than the current offered side," they said.
The secondary market is expected to "clean up" with this week's primary market pause, said J.P. Morgan strategists led by Peter DeGroot.
The quiet on Monday continues from last week's relative steadiness in the muni market, where long-awaited economic data was released following the end of the government shutdown, said Jason Wong, vice president of municipal at AmeriVet Securities.
The
Last week, muni yields rose slightly across the curve, with yields cut by an average of 1.5 basis points, with yields on 10-year notes rising by 2.1 basis points, he said.
"The rise in yields has pushed November returns slightly lower [to] 0.08% for the month and our year-to-date returns of 4%," Wong said.
Given last week's sizable calendar and negative fund flows, the muni market, following a recent bout of outperformance, felt a bit "stuck," Birch Creek strategists said.
Investors pulled $965.8 million from muni mutual funds last week, according to LSEG Lipper. This is the largest outflow figure since the week ending April 16, when the market was still dealing with the tariff-induced volatility.
However, the outflows were driven by a fund acquisition that occurred early last month. If this were excluded, J.P. Morgan strategists estimate inflows would have continued with the addition of $130 million to mutual funds.
"With the outflows, heavy new issuance to focus on, and conflicting views around the Fed's next move, dealers reported a cautious tone out of the gate," Birch Creek strategists said.
While demand appeared to "firm up" on the front end as deals were released, "investor hesitation to reach for longer duration [last] week was evident in both new issue subscriptions and secondary trade flow," they said.
In the investment-grade market, the New York City Municipal Water Finance Authority's $1.03 billion of water and sewer system second general resolution refunding revenue bonds saw "its serials mostly subscribed during the retail order period, but the term bonds in 2050 and 2055 were widened 5 bps in order to clear," Birch Creek strategists said.
In the high-yield market, a $522 million BB-plus rated United Airlines deal, issued by Houston, was downsized to $273 million with
A $94 million nonrated charter school deal was shelved, while a $110 million nonrated hotel deal got downsized and cheapened, Birch Creek strategists said.
Conversely, some deals in the high-yield cleared without a problem, though there were not robust levels of oversubscriptions, they said.
AAA scales
MMD's scale was unchanged: 2.52% in 2026 and 2.46% in 2027. The five-year was 2.41%, the 10-year was 2.75% and the 30-year was 4.16% at 3 p.m.
The ICE AAA yield curve was bumped up to two basis points 15 years and in: 2.48% (-2) in 2026 and 2.46% (-1) in 2027. The five-year was at 2.41% (-2), the 10-year was at 2.76% (-2) and the 30-year was at 4.12% (+1) at 4 p.m.
The S&P Global Market Intelligence municipal curve was unchanged: The one-year was at 2.51% in 2025 and 2.45% in 2026. The five-year was at 2.40%, the 10-year was at 2.75% and the 30-year yield was at 4.13% at 3 p.m.
Bloomberg BVAL was unchanged: 2.51% in 2025 and 2.46% in 2026. The five-year at 2.39%, the 10-year at 2.72% and the 30-year at 4.06% at 4 p.m.
Treasuries saw small gains.
The two-year UST was yielding 3.504% (-1), the three-year was at 3.49% (-1), the five-year at 3.606% (-2), the 10-year at 4.039% (-3), the 20-year at 4.642% (-3) and the 30-year at 4.68% (-3) near the close.
Primary to come
The Pennsylvania Housing Finance Agency (Aa1///) is set to price Tuesday $275.54 million of single-family mortgage revenue bonds, consisting of $254.2 million of non-AMT social bonds, Series 2025-151A, and $21.34 million of taxable, Series 2025-151B. Barclays.
The New York State Mortgage Agency (Aa1///) is set to price Tuesday $107.805 million of social non-AMT homeowner mortgage revenue bonds, Series 273. Jefferies LLC.
The Los Angeles Housing Authority (Aa1///) is set to price Tuesday $78.697 million of multifamily housing revenue bonds (Victory Blvd), Series 2025A. RBC Capital Markets.
The Jersey City Redevelopment Agency is set to price Tuesday $69.87 million of bonds from the Bayfront Redevelopment Project, consisting of $60.3 million of Series A and $9.57 million of Series B. Stifel Nicolaus.
Competitive
New Rochelle, New York, is set to sell $40.874 million bond anticipation notes at 11 a.m. Eastern Tuesday.
