Municipals were little changed as U.S. Treasury yields fell and equities ended down ahead of the conclusion of the Federal Reserve's May meeting.
Following the meeting, where
He does not expect a change in rates or a change to balance sheet policy, he said.
May's meeting will lack additional information as it is a meeting without a new Summary of Economic Projections, or dot plot, Howard said.
"There will likely only be minimal changes to the statement and during the press conference, Chair Powell will likely try to signal that the Fed is on hold for the time being and want to wait for more clarity about how tariffs will or won't impact the economy," he said.
The market's forecasting three cuts this year, which has been pared back from earlier expectations, though Howard believes that a "bit aggressive" unless the labor market weakens further.
"April's earlier price losses have finally attracted enough demand to start the market rolling again," with the demand last week coming from large mutual fund, exchange-traded fund and money market fund inflows totaling around $8 billion despite unencouraging year-to-date fund NAV returns, said Matt Fabian, a partner at Municipal Market Analytics.
Demand from separately managed accounts was clear, as the weekly trade count hit around 400,000 "to feed a record monthly total (by #) of trades" at 1.7 million, nearly double the monthly average count in the pre-SMA era, he said.
Additionally, crossover buyers were reportedly involved in many of the new issues in the primary market, "helping multiple large offerings see price bumps during the primary (LA DWP's longest yield was lowered 20bps) and positive breaks when they opened to trade," Fabian said.
However, it's unclear if demand "is replicable this week and next now that municipal outperformance richened relative value ratios nearly back to mid-March levels, when crossovers were still only watching the municipal action," he said.
Post-Liberation Day volatility has "unlocked lots of velocity," he said, noting "April was the heaviest traded month by par since March 2020, leading to an opportunity for trading-oriented buyers."
"But with the calendar likely to keep growing (and already $20B larger than YTD '24), our market also needs substantial going-away investor demand, which, even after last week, may still need higher ratios, cheaper yields, wider spreads," he said.
The two-year ratio Tuesday was at 77%, the five-year at 77%, the 10-year at 77% and the 30-year at 91%, according to Municipal Market Data's 3 p.m. ET read. ICE Data Services had the two-year at 75%, the five-year at 75%, the 10-year at 76% and the 30-year at 91% at 4 p.m.
There is also demand from high net worth individuals, said Adam Congdon, a director at Payden & Rygel.
With the volatility in the equity market, there is uncertainty with "bounces" in both directions, he said.
"But what you're seeing in munis that your all-in yields comparable to high-yield spreads on a tax-adjusted basis are bringing in enough demand from high net worth individuals," but it's more on a nominal basis despite the overlooking uncertainty, Congdon said.
With longer yields at 4.5%-plus on a fully exempt basis, "you're talking equivalence of 8% or 9% on a taxable equivalent basis," he noted.
"That is just bringing in some nominal buyers that are [seeking] long-term exempt income saying, 'We can live through this [uncertainty] in a high-quality asset class,'" Congdon said.
In the primary market Tuesday, Barclays priced for Yale University (Aaa/AAA//) $400 million of taxable Series 2025A bonds, with 4.701s of 4/2032 priced at par, callable 1/15/2032.
Jefferies priced for the Louisiana Public Facilities Authority (A3/A//) on behalf of Ochsner Health $304.36 million of revenue and refunding revenue bonds, Series 2025A, with 5s of 5/2026 at 3.36%, 5s of 2030 at 3.67%, 5s of 2035 at 3.98%, 5.5s of 2050 at 4.97%, 5.25s of 2050 at 5.03%, 5.5s of 2055 at 5.03% and 5.25s of 2055 at 5.10%, callable 5/15/2035.
Jefferies also priced for the authority on behalf of Ochsner Health $210.095 million of refunding revenue bonds, with 5s of 5/2030 at 3.67%, callable 2/15/2030.
Jefferies priced for the Mississippi Hospital Equipment and Facilities Authority on behalf of the Ochsner Health $117.905 million of refunding revenue bonds, Series 2025C, with 5.5s of 5/2055 at 5.03% and 5s of 2055 at 5.131%, callable 5/15/2035.
BofA Securities priced for the Palm Beach County School Board, Florida, (Aa3//AA-/) $275.445 million of certificates of participation, Series 2025A, with 5s of 8/2026 at 3.10%, 5s of 2030 at 3.22% and 5s of 2032 at 3/33%, noncall.
Goldman Sachs priced for the Oklahoma Capitol Improvement Authority (Aa2/AA/AA-/) $259.555 million of state highways capital improvement revenue bonds, Series 2025A, with 5s of 7/2026 at 3.00%, 5s of 2030 at 3.11%, 5s of 2035 at 3.49%, 5s of 2040 at 4.04%, 5s of 2045 at 4.44%, 5.25s of 2055 at 4.61% and 5.25s of 2055 at 4.68%, callable 7/1/2035.
Ramirez priced for the Ontario Public Financing Authority, California, (/AA-/AA-/) $193.34 million of 2025A lease revenue bonds, with 5s of 11/2025 at 3.03%, 5s of 2030 at 3.08%, 5s of 2035 at 3.52%, 5s of 2040 at 4.07%, 5s of 2045 at 4.47%, 5s of 2050 at 4.61%, 5.25s of 2055 at 4.65% and 4.5s of 2055 at 4.77%, callable 11/2/035.
Wells Fargo priced for the West Virginia Economic Development Authority (Ba2/BB+/BB+/) $150 million of solid waste disposal facilities revenue bonds, with 4.625s of 4/2055 with a mandatory tender date of 5/15/2032 priced at par., callable 5/15/2031.
In the competitive market, Tonawanda, New York, (/AA-//) sold $202.833 million of limited tax GOs to Roosevelt Cross, with 4s of 5/2026 at 2.86%, 4s of 2030 at 2.95%, 4s of 2035 at 3.35%, 4s of 2040 at par and 4s of 2043 at 4.30%, callable 5/15/2033
Ann Arbor Public Schools, Michigan, (A1///) sold $200.83 million of 2025 school building and site and refunding bonds to Morgan Stanley, with 5s of 5/2026 at 3.03%, 5s of 2030 at 3.16%, 5s of 2035 at 3.58%, 5s of 2040 at 4.16%, 5s of 2045 at 4.68% and 5s of 2047 at 4.77%, callable 5/1/2035.
AAA scales
MMD's scale was unchanged: The one-year was at 2.91% and 2.92% in two years. The five-year was at 3.00%, the 10-year at 3.33% and the 30-year at 4.40% at 3 p.m.
The ICE AAA yield curve was bumped one to two basis points: 2.87% (-2) in 2026 and 2.89% (-2) in 2027. The five-year was at 2.98% (-2), the 10-year was at 3.30% (-2) and the 30-year was at 4.39% (-1) at 4 p.m.
The S&P Global Market Intelligence municipal curve was unchanged: The one-year was at 2.90% in 2025 and 2.94% in 2026. The five-year was at 3.01%, the 10-year was at 3.33% and the 30-year yield was at 4.39% at 4 p.m.
Bloomberg BVAL was unchanged: 2.86% in 2025 and 2.91% in 2026. The five-year at 3.03%, the 10-year at 3.34% and the 30-year at 4.39% at 4 p.m.
Treasuries were firmer.
The two-year UST was yielding 3.792% (-4), the three-year was at 3.763% (-5), the five-year at 3.9% (-4), the 10-year at 4.309% (-4), the 20-year at 4.826% (-2) and the 30-year at 4.814% (-2) near the close.
Primary to come
The Connecticut Health and Educational Facilities Authority (Aaa/AAA//) will price Thursday on behalf of Yale University $500 million of revenue bonds, consisting of $250 million of Series B-1 and $250 million of Series B-2. Barclays.
The New Hampshire Health and Education Facilities Authority (/A/A/) is set to price Thursday for the Dartmouth Health Obligated Group $420.285 million of revenue bonds. Jefferies.
Pennsylvania Higher Education Assistance Agency is set to price Thursday $225 million of tax-exempt AMT fixed-rate education loan revenue bonds, consisting of $177 million of senior Series 2025-1A bonds (/AA//), serials 2030-2034, 2046, and $48 million of subordinate Series 2025-1C bonds (/BBB//), serials 2052. RBC Capital Markets.
The Illinois Finance Authority (/BB+//) is set to price Wednesday for the Illinois Institute of Technology $195 million of revenue bonds, consisting of $127.575 million of Series 2025A bonds, serials 2040-2046, and $67.425 million of taxable Series 2025B bonds, serials 2030-2039. PNC Capital Markets.
The Massachusetts Development Finance Agency (Baa3//BBB-/) is set to price Thursday for Suffolk University $158.405 million of revenue bonds. Morgan Stanley.
The Stockton Unified School District, California, (Aa3///) is set to price Thursday $140 million of BAM-insured 2022 Election GOs, Series A, serials 2031-2045, term 2049. Loop Capital Markets.
The MIDA Cormont Public Infrastructure District is set to price Thursday $139.737 million of non-rated bonds, consisting of $46 million of Series 1, $74.271 million of Series 2 and $19.466 million of Series 3. D.A. Davidson.
Grand Rapids, Michigan, (Aa2/AA//) is set to price Wednesday $125.535 million of limited tax GOs, serials 2030-2055. Huntington Securities.
The Indianapolis Local Public Improvement Bond Bank (/AA-//) is set to price Wednesday for the Indianapolis Public Transportation Corp. Project $125 million of local income tax revenue bonds, Series 2025 A, serials 2025-2035, terms 2036, 2037, 2038, 2039, 2040, 2041, 2042, 2043, 2045. Stifel.
Denton County, Texas, (Aaa/AAA//) is set to price Thursday $108.45 million of permanent improvement and refunding bonds, serials 2026-2045. Cabrera Capital Markets.
Competitive
Fulton County, Georgia, is set to sell $275 million of general fund tax anticipation notes at 10 a.m. Wednesday.
The Beaufort County School District, South Carolina, (Aa1/AA//) is set to sell $132.2 million of GOs, Series 2025B, at 1 p.m. Thursday.
