Municipals were mixed Tuesday as U.S. Treasuries cheapened slightly and equities ended mixed.
The two-year muni-UST ratio Monday was at 63%, the five-year at 64%, the 10-year at 73% and the 30-year at 92%, according to Municipal Market Data's 3 p.m. ET read. ICE Data Services had the two-year at 62%, the five-year at 66%, the 10-year at 72% and the 30-year at 92% at a 4 p.m. read.
The muni market has a lot going on, said Alice Cheng, director of municipal credit and investor strategy at Janney.
"The cloud of the budget bill that passed leaves a lot of thinking for muni participants … and then today we are hit with more tariff talks," she said.
Both remain big topics for muni investors, with the latter returning to the forefront as a 90-day reprieve comes to an end on July 9, although that date has been pushed off once more until Aug. 1, with President Donald Trump saying there will be no further extensions.
"Market volatility is likely to pick up, but the latest development does not constitute an escalation in the trade war," according to UBS strategists.
"While tariffs will likely remain high — compared with levels at the start of the year — as will the headline risk, we think the U.S. effective tariff rate should end the year at around 15%," said Ulrike Hoffmann-Burchardi, CIO for the Americas and global head of equities at UBS Global Wealth Management. "This would be a headwind to growth but not enough to trigger a recession given the resilience of the U.S. consumer and the adaptability of global supply chains."
Due to the budget bill and tariff negotiations, some spreads have started to widen for lower-rated bonds, potentially signaling a flight-to-quality that will continue to be seen in the investor base, Cheng said.
Issuance ramps up this week after a holiday-shortened week, with $11.317 billion, comprised of $8.879 billion negotiated deals and $2.439 billion competitive transactions.
A slew of competitive deals the past two days mostly did very well and were very aggressive, especially on the short end, Cheng said.
Part of the reason bids on the competitive side have been so strong is the influx of money from reinvestment opportunities, she said.
Given the $56.805 billion volume in June and this week returning to the new normal of $10-plus billion supply, issuance over the summer may be heavier than normal.
"There's a ton of value in that 15- to 20-year range, especially on some of the smaller deals, where you can negotiate call features and coupons to your strategic needs," said Tim McGregor, managing partner at Riverbend Capital Advisors.
Some market forecasts peg issuance for 2025 between $550 billion and $600 billion, but McGregor believes that is too high, noting it's possible for a surprise slowdown of supply in the fall.
"We're trying to take advantage of everything we can here at the moment, while supply is high and some municipals are really attractive valuations," he said.
In the primary market Tuesday, BofA Securities priced for the Miami Beach Redevelopment Agency, Florida, (A1/AA//) $241.385 million of City Center/Historic Convention Village tax increment revenue refunding bonds, insured by Assured Guaranty, with 5s of 2/2026 at 2.73%, 5s of 2030 at 2.95%, 5s of 2035 at 3.67%, 5s of 2040 at 4.37% and 5s of 2044 at 4.79%, callable 2/1/2035.
J.P. Morgan priced for the Hampton Roads Sanitation District, Virginia, $223.86 million of subordinate wastewater revenue bonds, Series 2025A, with 5s of 7/2026 at 2.80%, noncall.
Piper Sandler priced for the Clear Creek Independent School District, Texas, (Aaa//AAA/) $202.435 million of unlimited tax school building and refunding bonds, with 2/2027 at 2.65%, 5s of 2030 at 2.76%, 5s of 2035 at 3.43%, 5s of 2040 at 4.15% and 5s of 2045 at 4.63%, callable 2/15/2035.
Raymond James priced for the Tomball Independent School District, Texas, (Aaa/AAA//) $193.02 million of PSF-insured unlimited tax school building bonds, with 5s of 2/2027 at 2.58%, 5s of 2030 at 2.72%, 5s of 2035 at 3.41%, 5s of 2040 at 4.15%, 5s of 2045 at 4.63% and 4.5s of 2051 at 4.89%, callable 2/15/2035.
RBC Capital Markets priced for the Marble Falls Independent School District, Texas, (/AAA//) $151.035 million of PSF-insured unlimited tax school building bonds, with 5s of 2/2026 at 2.61%, 5s of 2030 at 2.76%, 5s of 2035 at 3.45%, 5s of 2040 at 4.18% and 5s of 2045 at 4.65%, callable 2/15/2035.
AAA scales
MMD's scale was mixed: The one-year was at 2.46% (-2) and 2.46% (-3) in two years. The five-year was at 2.55% (-2), the 10-year at 3.22% (+1) and the 30-year at 4.55% (+1) at 3 p.m.
The ICE AAA yield curve saw cuts outside five years: 2.50% (-3) in 2026 and 2.43% (-2) in 2027. The five-year was at 2.64% (unch), the 10-year was at 3.18% (+2) and the 30-year was at 4.52% (+3) at 4 p.m.
The S&P Global Market Intelligence municipal curve was mixed: The one-year was at 2.47% (-2) in 2025 and 2.48% (-2) in 2026. The five-year was at 2.56% (-2), the 10-year was at 3.21% (+1) and the 30-year yield was at 4.54% (+1) at 4 p.m.
Bloomberg BVAL was mixed: 2.50% (-2) in 2025 and 2.52% (-2) in 2026. The five-year at 2.62% (-2), the 10-year at 3.17% (-1) and the 30-year at 4.54% (+3) at 4 p.m.
Treasuries saw small losses.
The two-year UST was yielding 3.904% (+1), the three-year was at 3.87% (+1), the five-year at 3.984% (+3), the 10-year at 4.412% (+3), the 20-year at 4.939% (+3) and the 30-year at 4.917% (+2) just before the close.
Primary to come
The California State University Trustees (Aa2/AA-//) are set to price Thursday $1.727 billion of systemwide revenue bonds, consisting of $1.613 million of Series A tax-exempt bonds and $113.935 million of Series B taxable bonds. Goldman Sachs.
The Washington Metropolitan Area Transit Authority (/AA//AA/) is set to price Wednesday $653.5 million of Series 2025A second lien dedicated revenue bonds. Barclays.
The Spring Independent School District, Texas, (Aaa/AAA//) is set to price Thursday $590.865 million of PSF-insured unlimited tax school building and refunding bonds, Siebert Williams Shank.
The Mesquite Independent School District, Texas, (/AAA/AAA/) is set to price Wednesday $496.565 million of PSF-insured unlimited tax school building and refunding bonds. Cabrera Capital Markets.
The Southern California Public Power Authority (Aa2//AA-/) is set to price Wednesday $428.87 million of Southern Transmission System Renewal Project revenue bonds, consisting of $214.725 million of Series 2025-1 fixed rate bonds and $214.145 million of Series 2025-2 fixed tender bonds - term rate mode. RBC Capital Markets.
The Waller Independent School District, Texas, (Aaa/AAA//) is set to price Wednesday $398.82 million of PSF-insured unlimited tax school building bonds. Jefferies.
The Texas Public Finance Authority (/AAA/AAA/) is set to price Wednesday $300 million of taxable GO refunding bonds. Raymond James.
Collin County, Texas, is set to price Wednesday a $229.85 million deal, consisting of $221.85 million of limited tax permanent improvement and refunding bonds (Aaa/AAA//) and $8 million of tax notes (/AAA//). Jefferies.
The Lubbock Independent School District, Texas, (Aaa/AAA//) is set to price Wednesday $222.625 million of PSF-insured unlimited tax school building bonds. RBC Capital Markets.
The Local Building Authority of Alpine School District, Utah, (Aa2//AA+/) is set to price Thursday $201.045 million of West School District lease revenue bonds. Morgan Stanley.
The Flour Bluff Independent School District, Texas, (/AAA//) is set to price Thursday $193.49 million of PSF-insured unlimited tax school building bonds Ramirez.
The Public Finance Authority is set to price $175 million of nonrated tax-exempt pooled securities, Series 2025-1 Class A certificates. J.P. Morgan.
The Nevada Housing Division (/AA+//) is set to price Wednesday $158.835 million of senior single-family mortgage revenue bonds, consisting of $60 million of non-AMT Series C bonds and $98.835 million of taxable Series D bonds. J.P. Morgan.
The Foothill-De Anza Community College District, California, (Aaa/AAA//) is set to price Wednesday $151 million of Election of 2020 GOs, Series D. Piper Sandler.
The Public Finance Authority is set to price Thursday $150.212 million of Cuyahoga River Capital Portfolio municipal certificates, Series 20205-1 Class A. HilltopSecurities.
The Palm Beach County Health Facilities Authority (/BBB-/BBB/) is set to price Wednesday $148.775 million of Jupiter Medical Center Project hospital revenue bonds. RBC Capital Markets.
The Anna Independent School District, Texas, (/AAA//) is set to price Wednesday $135 million of PSF-insured unlimited tax school building bonds. BOK Financial Securities.
El Paso, Texas, (/AA//AA+/) is set to price Thursday $102.565 million of GO refunding bonds. Jefferies.
Competitive
Miami-Dade County, Florida, (Aa2/AA//) is set to sell $242.195 million of BuildingBetter Communities Program GO refunding bonds, Series 2025A, at 9:30 a.m. Thursday.
San Jose, California, (Aa1//AAA/) is set to sell $209.57 million of Series A and Series B disaster preparedness, public safety and infrastructure GOs at noon Wednesday.
Frisco, Texas, is set to sell $147.29 million of GO refunding and improvement bonds at 10:45 a.m. Wednesday.
Washington County, Oregon, (Aaa///) is set to sell $142 million of full faith and credit obligations at noon Wednesday.
The Greater Fall River Regional Vocational Technical School District, Massachusetts, is set to sell $104.995 million of state-qualified GO school project loan chapter 70B bonds at 11 a.m. Wednesday.
