Municipals were little changed ahead of a massive new-issue calendar of almost $17 billion, the highest weekly total this year. U.S. Treasuries were firmer and equities were mixed.
Two municipal bond analyst firms are feeling good about the upcoming months.
BofA Securities views May's municipal bond market performances as a good omen for June and beyond. "We expect overall muni market internals to remain quite strong in June, July and August, given favorable technicals."
June "looks more promising for munis," BofA says. "Our forecasted issuance target is $60 billion, while expected redemptions and coupon payments are on the order of $73 billion. Mutual funds have been consistently large and positive. Retail participation remains good. So, overall muni market internals should remain quite strong in June, and indeed for July and August as well."
So far this year, long-term muni issuance is $212.7 billion, which is up 11% versus the same time period last year. New money is up 22%, while refundings are down 11%, they say.
"The only impetus missing," the analysts say, "is a supportive macro rates environment, which may develop as passage of the 'One, Big, Beautiful Bill' gets closer given its inclusion of a large debt ceiling increase that is important for the bond markets."
Muni yields were little changed this week, the BofA analysts note.
The two-year muni-UST ratio Friday was at 71%, the five-year at 72%, the 10-year at 76% 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 68%, the five-year at 71%, the 10-year at 73% and the 30-year at 91% at 4 p.m.
Muni-UST ratios have cheapened somewhat, but credit spreads were stable. That is "in line with the overall trend for May: we had a bearish Treasury market, a slightly bull steepening muni rates curve, falling ratios and likely topping credit spreads," BofA analysts say.
"This should be regarded as a good omen for munis down the road, especially if the macro rates environment shifts to a more constructive or possibly bullish mode," the BofA analysts conclude. "Also, this shows that 'Buy munis in April' still worked this year, even in a difficult rates environment."
Barclays strategists are also bullish on the muni market over the near term despite a fairly negative performance so far this year.
"Next week should be quite interesting," write strategists Mikhail Foux, Grace Cen and Francisco San Emeterio.
Issuance for the week of June 2 is estimated at $16.901 billion, with $13.764 billion of negotiated deals and 3.138 billion of competitive deals on tap, according to LSEG.
The Indiana Financing Authority leads the negotiated calendar with $1.502 billion of health system revenue bonds for Indiana University Health, followed by the San Francisco Public Utilities Commission with $994.25 million of water revenue bonds.
The competitive calendar is led by Pennsylvania with $1.171 billion of GOs in two series.
This robust supply "will be met with heavy June redemptions, which could create buying opportunities. We remain bullish, more so on duration than credit or relative value versus USTs, although we still like high yield benchmarks that underperformed in April," Barclays analysts say.
Through the end of May, returns for both investment grade and high yield muni indexes are in negative territory, the analysts note. In fact, "munis are one of the very few fixed income asset classes that are in the red in 2025."
"The real underperformance for the asset class this year came from duration, not from credit. While returns for the short end all the way up to the 10-year maturity bucket remain in positive territory, the 20-year+ high grade segment has underperformed, consistent with the U.S Treasury performance, dragging down the whole IG index."
Looking ahead, however, the Barclays analysts write, "if rates continue trending lower, as we expect in the medium-term, there should be a lot more upside for the asset class, which it should finally realize in the second half of the year. Issuance should remain robust next month (with nearly $20 billion expected to get placed), but is likely to be met with heavy redemptions, so we are not overly concerned about the market direction."
AAA scales
MMD's scale was unchanged: The one-year was at 2.79% and 2.77% in two years. The five-year was at 2.84%, the 10-year at 3.33% and the 30-year at 4.52% at 3 p.m.
The ICE AAA yield curve saw small cuts on bonds 10 years and out: 2.78% (unch) in 2026 and 2.70% (-1) in 2027. The five-year was at 2.85% (unch), the 10-year was at 3.27% (+1) and the 30-year was at 4.49% (+2) at 4 p.m.
The S&P Global Market Intelligence municipal curve was unchanged: The one-year was at 2.80% in 2025 and 2.78% in 2026. The five-year was at 2.83%, the 10-year was at 3.32% and the 30-year yield was at 4.52% at 4 p.m.
Bloomberg BVAL was unchanged: 2.75% in 2025 and 2.77% in 2026. The five-year at 2.86%, the 10-year at 3.30% and the 30-year at 4.49% at 4 p.m.
Treasuries were firmer.
The two-year UST was yielding 3.903% (-4), the three-year was at 3.864% (-4), the five-year at 3.963% (-4), the 10-year at 4.399% (-2), the 20-year at 4.925% (-1) and the 30-year at 4.919% (flat) near the close.
Primary to come
The Indiana Finance Authority ((Aa2/AA/AA/) is set to price Tuesday $1.502 billion of Indiana University health system revenue bonds. J.P. Morgan Securities LLC.
The Public Utilities Commission of the City and County of San Francisco (Aa2/AA-//) is set to price Thursday $994.25 million of San Francisco water revenue and refunding bonds. J.P. Morgan.
The Downtown Revitalization Public Infrastructure District, Utah, is set to price Thursday $869 million of SEG Redevelopment project sales tax revenue bonds, consisting of $651.265 million of Series 2025A (A1///) and $217.735 million of Series 2025B (A3///). Goldman Sachs.
The Board of Regents of the University of Texas System (Aaa/AAA//) is set to price Tuesday $800 million of revenue financing system refunding bonds. Wells Fargo.
The Metropolitan Washington Airports Authority (Aa3/AA-/AA-/) is set to price Thursday $714.495 million of airport system revenue and refunding AMT bonds, serials 2026-2045, terms 2050, 2055. RBC Capital Markets.
Chicago (/BBB/A-/A-) is set to price Wednesday $527.435 million of general obligation bonds. Loop Capital Markets.
The Bay Area Toll Authority is set to price with $512.965 million, consisting of $400 million of San Francisco Bay Area Toll Bridge revenue green bonds, climate bond certified (/AA/AA/) and $112.965 million of San Francisco Bay Area second subordinate toll bridge revenue bonds (/AA-/AA-/). Wells Fargo.
The Department of Water and Power of the City of Los Angeles (Aa2//AA-/AA) is set to price Thursday (retail Wednesday) $507.04 million of power system revenue bonds, serial 2030-2035. Barclays.
Los Angeles (/AA/AA+/) is set to price Tuesday $476.61 million of wastewater system revenue refunding bonds. Jefferies.
The Clifton Higher Education Finance Corp. (Aaa///) is set to price Wednesday $457.195 million of International Leadership of Texas, Inc. education revenue and refunding bonds, serials 2026-2055. PNC Capital Markets LLC.
The Las Vegas Valley Water District, Nevada, (Aa1/AA+//) is set to price Tuesday $388.9 million of limited tax general obligation water improvement bonds, serials 2029-2045, terms 2050, 2055. BofA Securities.
The Utah Housing Corp. (Aa2///) is set to price Wednesday $350 million of single-family mortgage bonds. RBC Capital Markets.
The Prosper Independent School District, Texas, (Aaa//AAA/) is set to price Tuesday $300 million of unlimited tax school building bonds, PSF insured, serials 2027-2055. Piper Sandler.
The Illinois Finance Authority (/A+/AA-/) is set to price Thursday $297.005 million for UChicago Medicine revenue bonds. J.P. Morgan.
The Colorado Health Facilities Authority (Aa2/AA/AA/) is set to price Wednesday $282.38 million of AdventHealth Obligated Group hospital revenue bonds J.P. Morgan.
Prince George's County, Maryland, (Aa1/AAA/AAA/) is set to price Wednesday $247.675 million of general obligation consolidated public improvement bonds, serials 2026-2045. BofA Securities.
Palm Beach County, Florida, is set to price Wednesday $235.8 million of Provident Group - PBAU Properties II LLC - Palm Beach Atlantic University Project revenue bonds. J.P. Morgan.
The Georgia Housing and Finance Authority (/AAA//) is set to price Monday $234.035 million of non-AMT single-family mortgage bonds. Morgan Stanley.
Tacoma, Washington, (/AA/AA-/) is set to price Tuesday $224.315 million of electric system revenue and refunding green bonds. Raymond James.
The Madison Metropolitan School District, Wisconsin, is set to price Tuesday $200 million of tax-exempt GO promissory notes and taxable GO promissory notes. Baird.
The Jackson County School District, Georgia, (Aa1/AA+//) is set to price Thursday $200 million of general obligation school bonds, insured by the Georgia State Aid Intercept Program. Raymond James.
The Nebraska Investment Finance Authority (/AAA//) is set to price Wednesday $188.29 million of single-family revenue bonds, non-AMT social bonds and taxables. J.P. Morgan.
The San Marcos Unified School District, California, (Aa3///) is set to price $186.23 million of Series A Election 2024 GOs and 2025 GO refunding bonds. RBC Capital Markets.
The Swarthmore Borough Authority, Pennsylvania, (Aaa/AAA//) is set to price Tuesday $165.225 million of Swarthmore College Revenue bonds. Goldman Sachs.
The Oklahoma Water Resources Board (/AAA/AAA/) is set to price Tuesday $160 million of revolving fund revenue bonds - drinking water program. Raymond James.
Seattle (Aa1/AA+//) is set to price Wednesday $155.565 million of drainage and wastewater system improvement and refunding revenue bonds, serials 2026-2055. BofA Securities.
The Louisiana Public Facilities Authority is set to price Wednesday $154.98 million of Acadiana Renaissance Charter Academy Project revenue bonds. HJ Sims.
The School District of Seminole County, Florida, (Aa3/AA//) is set to price Tuesday $150.13 million of sales tax revenue bonds, Series 2025, insured by: Assured Guaranty Inc., serials 2025-2034. Raymond James.
The Mid-Bay Bridge Authority (/AA//) is set to price Tuesday $139.76 million of 1st senior lien revenue refunding bonds, insured by: Assured Guaranty Inc., serials 2026-2040. Goldman Sachs.
The Dormitory Authority of the State of New York (Aa2///) is set to price Wednesday $135.565 million of Orange-Ulster issue master Boces Program Lease revenue bonds serials 2026-2044. Roosevelt & Cross.
The Alaska Housing Finance Corp. (Aa1/AA+//) is set to price Tuesday $135 million of state capital project bonds, serials 2026-2036. RBC Capital Markets.
The Sunnyvale School District, California, (/AAA//) is set to price Wednesday $134.795 million of general obligation and refunding bonds. Stifel.
Garland, Texas, (/AA+/AA+/) is set to price Wednesday $116.59 million of general obligation bonds and combination tax and revenue certificates of obligation. J.P. Morgan.
The Ventura Unified School District, California, (Aa3///) is set to price $113 million of general obligation bonds, serials 2026-2027, 2035-2045, term 2055. RBC Capital Markets.
Georgetown, Texas, (/AA-/AA-/) is set to price Thursday $106.495 million of utility system revenue bonds, serials 2026-2045, terms 2050, 2055. HilltopSecurities Inc.
The Alabama Housing Finance Authority (Aa1///) is set to price Tuesday $100 million of collateralized single family mortgage revenue bonds, non-AMT, serials 2026-2037, terms 2040, 2045, 2050, 2055, 2056. Raymond James.
Competitive
Pennsylvania (Aa2/A+/AA/) is set to take bids on $853.155 million general obligation bonds, First Refunding Series A of 2025, at 11 a.m. eastern Wednesday.
Pennsylvania is also taking bids on $317.41 million general obligation bonds, First Refunding Series B of 2025, at 11:30 a.m. Wednesday.
The Board of Education of Fayette County, Kentucky, takes bids on $229.97 million general obligation bonds, Series 2025A (Kentucky School District Enhancement Program), at 11 a.m. Thursday.
New Mexico (Aa2/AA//) takes bids on $214.35 million capital projects general obligation bonds, Series 2025, at 10 a.m. Wednesday.
The Maryland Department of Transportation (Aa1/AAA/AA+/) takes bids on $200 million consolidated transportation bonds, Series 2025A, at 10:30 a.m. Wednesday.
Fort Worth, Texas, (Aa1//AA/) takes bids on $188.995 million water and sewer system revenue bonds, Series 2025, at 10:30 a.m. Wednesday.
Virginia takes bids on $171.815 million general obligation bonds, Series 2025A, and refunding Bonds, Series 2025B, at 10:30 a.m. Thursday.
The Indian Prairie School District #204, Illinois, (Aa1/AAA//) takes bids on $151.095 million general obligation school building bonds Series 2025, at 11 a.m. Tuesday.
The Unified Government of Athens-Clarke County, Georgia, (Aa1//AAA/) takes bids on $135.425 million water and sewerage revenue refunding bonds, Series 2025, at 11 a.m. Tuesday.
The Virginia Public School Authority (Aaa/AAA/AAA/) takes bids on $105.495 million special obligation school financing bonds, Series 2025, at 10:15 a.m. Tuesday.
The Putnam County School District, Florida, (A2//A+/) takes bids on $100 million general obligation school bonds, Series 2025, at 11 a.m. Tuesday.
Jessica Lerner and Lynne Funk contributed to this story.
