Munis were steady Friday as short-term U.S. Treasuries richened and equities ended down.
The two-year muni-UST ratio Friday was at 62%, the five-year at 59% the 10-year at 62% and the 30-year at 88%, according to Municipal Market Data's 3 p.m. EDT read. The two-year muni-UST ratio was at 61%, the five-year at 58%, the 10-year at 63% and the 30-year at 88%, according to ICE Data Services.
Munis were largely unchanged this week, and tax-exempts continue to be "quite unattractive" at current levels, said Barclays strategists led by Mikhail Foux.
"On the one hand, munis are unlikely outperform Treasuries by much at current levels — in the past several years, February has not been kind to municipals, as the 2020 and 2021 selloffs actually started that month, but even aside from those two years, tax-exempts frequently underperformed, especially when they traded at low ratios," they said.
Conversely, technicals remain very supportive: "fund inflows are solid; mutual fund cash balances are elevated; supply has been rather subdued, especially compared with investor expectations going into 2026; and finally, rate volatility has been relatively low, at least early on this year," Barclays strategists said.
Additionally, February redemptions should be among the largest in recent history, if not the largest on record, they said.
"Almost $27 billion is moving just on bonds maturing and being called," while another $17 billion in interest payments, bring the total "money-in-motion" to over $43 billion, said Gina Fay, director of fixed income private wealth at Raymond James, and Drew O'Neil, director of fixed income strategy at the firm, citing Bloomberg data.
"This should be supportive of prices as demand — to reinvest principal and interest payments — outweighs new issue supply with this week's lighter new issue calendar," they said.
Over the past decade, February issuance has been around $31 billion, per Bond Buyer data.
Market update redux
The muni market is pretty resilient, said Liz Hanify, head of fixed-income sales, municipals and product at Fidelity.
"We've seen there are these moments where there can be a little bit of market shock, but overall, because of our underlying strong credit structure and domestic focus," the muni market is in good shape, she said.
Some pretty "notable activity" has occurred over the past year, "and demand held, the market held, yields held," Hanify said.
The muni curve is returning to a more traditional shape, which is compelling investors to think further out and start building ladder or longer-term investment options, she said.
Muni mutual funds have seen sizable inflows to start the year.
However, "because there's so many different players in the marketplace and there's so many different ways in which we can distribute and package municipal bonds that when you see an inflow in one place, you might see an outflow in another," Hanify said.
Despite this, there's still strong demand across the board for munis, she noted.
"They're always going to be an important part of one's portfolio. And provide sort of that security and anchoring that we need," Hanify said.
The way in which munis are packaged and incorporated by the marketplace will similarly "ebb and flow," she said.
New-issue calendar
The new-issue calendar is an estimated $6.736 billion, with $5.756 billion of negotiated deals on tap and $980.1 million of competitives.
Build NYC Resource Corp. leads the negotiated calendar with $635.27 million of nonrated revenue bonds (RiverSpring Health Senior Living, Inc. Project).
The competitive calendar is led by the Huron Valley School District, Michigan, with $157.245 million of 2026 school building and site bonds.
AAA scales
MMD's scale was little changed: 2.18% (unch) in 2027 and 2.18% (unch) in 2028. The five-year was 2.24% (-1), the 10-year was 2.63% (-1) and the 30-year was 4.29% (unch) at 3 p.m.
The ICE AAA yield curve was bumped one to two basis points: 2.18% (-1) in 2027 and 2.17% (-1) in 2028. The five-year was at 2.21% (-1), the 10-year was at 2.66% (-1) and the 30-year was at 4.24% (-1) at 4 p.m.
The S&P Global Market Intelligence municipal curve was unchanged: The one-year was at 2.17% in 2027 and 2.17% in 2028. The five-year was at 2.26%, the 10-year was at 2.65% and the 30-year yield was at 4.24% at 3 p.m.
Bloomberg BVAL was little changed: 2.23% (unch) in 2027 and 2.20% (unch) in 2028. The five-year at 2.22% (unch), the 10-year at 2.61% (unch) and the 30-year at 4.16% (unch) at 4 p.m.
Short-term USTs were firmer.
The two-year UST was yielding 3.525% (-4), the three-year was at 3.599% (-3), the five-year at 3.796% (-2), the 10-year at 4.242% (+1), the 20-year at 4.824% (+1) and the 30-year at 4.877% (+2) near the close.
Primary to come
Build NYC Resource Corp. is set to price Wednesday $635.27 million of nonrated revenue bonds (RiverSpring Health Senior Living, Inc. Project), consisting of $312.165 million of Series 2026A, $21.5 million of Series 2026B-1, $43.5 million of Series 2026B-2, $86.5 million of Series 2026B-3, $160.5 million of Series 2026B-4 and $11.105 million of Series 2026C. Ziegler.
The Chicago Transit Authority (/A+//AA-) is set to price Thursday a $575 million deal, consisting of $525 million of Series 2026A sales tax receipts revenue project and refunding bonds (/A+//AA-/) and $50 million of Series 2026B sales tax receipts revenue refunding bonds (/AA//AA/). Wells Fargo.
The San Diego County Regional Transportation Commission (/AAA/AAA/) is set to price Tuesday $343.275 million of sales tax refunding revenue bonds (limited tax bonds), 2026 Series A. Wells Fargo.
The Cherry Creek School District No. 5 (Aa1/AA//) is set to price Tuesday $316.665 million of GOs. Stifel.
The Port Authority of New York and New Jersey (Aa3/AA-/AA-/) is set to price Tuesday $300 million of non-AMT consolidated refunding bonds, 251st Series. Siebert Williams Shank.
The Tarrant County Cultural Education Facilities Finance Corp. (Aa2/AA-//) is set to price Tuesday $295.01 million of hospital revenue bonds (Baylor Scott & White Health Project), consisting of $149.115 million of Series 2026F and $145.895 million of Series 2026G. J.P. Morgan.
The Equitable School Revolving Fund (/A+//) is set to price Wednesday $275 million of social senior national charter school revolving loan fund revenue bonds, Series 2026 A. Siebert Williams Shank.
Th Dallas Independent School District, Texas, (Aaa///) is set to price Wednesday $273.985 million of PSF-insured multi-modal unlimited tax school building bonds, Series 2026B. Stifel.
The Olentangy Local School District, Ohio, (Aa1/AAA//) is set to price Tuesday $263.36 million of various purpose refunding bonds. RBC Capital Markets.
Cartersville, Georgia, (Aa3/AA-//) is set to price Thursday $240.955 million of water and sewer revenue bonds. Raymond James.
The Virginia Housing Development Authority (Aaa/AAA//) is set to price Monday $225 million of commonwealth mortgage bonds, consisting of $150 million of taxables, 2026 Series A, and $75 million of non-AMT bonds, 2025 Series G, Subseries G-1. Raymond James.
The Nebraska Investment Finance Authority (/AAA//) is set to price Wednesday $203.1 million of single-family housing revenue bonds. J.P. Morgan.
The Maryland Health and Higher Educational Facilities Authority (A2/A//) is set to price Thursday $189.395 million of MedStar Health issue revenue bonds, Series 2026C. J.P. Morgan.
The Tarrant County Cultural Education Facilities Finance Corp. (Aa3/AA-//) is set to price Wednesday $186.93 million of hospital revenue bonds (Methodist Hospitals of Dallas). HilltopSecurities.
Fremont Union High School District (Aaa/AAA//) is set to price Tuesday $153.19 million of GOs, consisting of $7 million of tax-exempt Series 2026 bonds, $93 million of taxable Series 2026 bonds and $53.19 million of refunding Series A bonds. RBC Capital Markets.
The Indiana Housing and Community Development Authority (Aaa///) is set to price Tuesday $122.305 million of social single family mortgage revenue bonds, consisting of $80.27 million of non-AMT Series A-1 bonds and $42.035 million of taxable Series A-2 bonds. J.P. Morgan.
The Alaska Housing Finance Corp. (Aaa/AAA//) is set to price Monday $106.4 million of general mortgage revenue bonds II, 2026 Series A. Raymond James.
The Oxnard Union High School District (Aa3///) is set to price Tuesday $103.99 million of GOs, consisting of $75 million of Series A Election of 2024 bonds, $16.98 million of forward delivery 2026 refunding bonds and $12.01 million of 2025 refunding bonds. Baird.
Competitive
The Huron Valley School District, Michigan, (/AA//) is set to sell $157.245 million of 2026 school building and site bonds, Series I, at 11 a.m. Eastern Tuesday.
Harford County, Maryland, (Aaa/AAA/AAA/) is set to sell $110 million of GO consolidated public improvement bonds, Series 2026A, at 10:15 a.m. Tuesday.
