Municipals remained rangebound as U.S. Treasuries were little changed and equities ended down.
The two-year muni-UST ratio Wednesday was at 69%, the five-year at 66%, the 10-year at 67% and the 30-year at 88%, according to Municipal Market Data's 3 p.m. EDT read. ICE Data Services had the two-year at 70%, the five-year at 65%, the 10-year at 67% and the 30-year at 87% at a 4 p.m. read.
The Investment Company Institute Wednesday reported inflows of $260 million for the week ending Dec. 10, following $262 million of inflows the previous week.
Exchange-traded funds saw inflows of $1.119 billion after $392 million of inflows the week prior, per ICI data.
Last week, the new-issue market was "pretty active" as market participants are trying to get things done before yearend, said Jeff Timlin, a partner at Sage Advisory.
Supply moderated this week as issuance was at $6 billion.
"Once this week is done, that's it for the year. The following week is Christmas, and then after that, the new year," Timlin said.
During those two weeks, there will be almost no activity that would push the market one way or the other, he said.
Issuance for this year will top $560 billion, and
Capital needs remain strong, but for at least the next three years, many fiscal responsibilities will likely shift to states, localities and nonprofits, she said.
Meanwhile, munis remain stable, according to Timlin.
From a credit standpoint, heading into 2026, some of the lower-rated credits will be more volatile. And with these more volatile revenue streams, some adjustments to municipalities' balance sheets and spending will be made, he said.
Most municipalities, though, will not deal with the credit issues seen in some, like Chicago, he said.
"We're seeing some signs of economic challenges. I don't think anybody's anticipating a recessionary environment, but more of a low-growth environment," Timlin said.
"These municipalities are so used to both, going back five years, federal funds then followed by significant growth in their revenue because of the robust economy, that making a more normalized revenue stream sometimes seems to be a challenge," he said.
The secondary market is fine. There are average to slightly below average bids wanteds, while the broker-dealer inventory is somewhere in the $15 billion range, Timlin said.
"That is a normal kind of seasonal thing that happens because [fewer] participants come to the market in general," he said.
Institutions will be active until the last minute, while retail investors have already started to pull back, according to Timlin.
"People who you know either buy their own bonds or buy bonds through [financial advisors] or broker-dealers are probably more focused on other things right now than reinvesting their munis," he said, noting it's not a seasonally high period for reinvestment.
"Whatever portfolio that they've constructed prior to Thanksgiving, they're probably happy with until year-end," Timlin said.
In the primary market Wednesday, Jefferies priced for the New York City Transitional Finance Authority (Aa1/AAA/AAA/) $2 billion of future tax-secured subordinate refunding bonds. The first tranche, $500 million of tax-exempt Fiscal 2026 Series C bonds, saw 5s of 11/2027 at 2.58%, 5s of 2030 at 2.75%, 5s of 2035 at 3.12%, 5s of 2040 at 3.70%, 5s of 2045 at 4.30%, 5s of 2050 at 4.59% and 5.25s of 2055 at 4.64%, callable 5/1/2036.
The second tranche, $1.311 billion of tax-exempt Fiscal 2026 Series D-1 bonds, saw 5s of 11/2027 at 2.58%, 5s of 2030 at 2.75%, 5s of 2035 at 3.12%, 5s of 2040 at 3.70% and 5s of 2041 at 3.84%, callable 5/1/2036.
The third tranche, $167.725 million of taxable Fiscal 2026 Series D-2 bonds, saw all bonds price at par: 3.895s of 11/2026 and 3.805s of 2027
The fourth tranche, $21.015 million of tax-exempt Fiscal 2026 Series E bonds, saw 5s of 5/2026 at 2.58%, 5s of 2030 at 2.74%, 5s of 2035 at 3.07% and 5s of 2036 at 3.19%.
Piper Sandler priced for the Virgin Island Hotel Development Financing Corp. $282.27 million of Frenchman's Reef Hotel Acquisition Project senior lien hotel revenue bonds. The first tranche, $272.27 million of Series 2025A-1 bonds, saw 4.5s of 2/2033 at 4.70%, 5s of 2038 at 5.25%, 5.75s of 2045 at 6.00% and 6s of 2055 at 6.25%, callable 2/1/2035.
The second tranche, $10 million of taxable Series 2025A-2 bonds, saw 8.875s of 2/2034 at 9.25%.
PNC Capital Markets priced for the Metropolitan Water District of Southern California (/AAA/AA+/) $184.225 million of special variable rate water revenue refunding bonds, 2025 Series B, with 2.2s of 7/2047 priced at par.
AAA scales
MMD's scale was little changed: 2.46% (-2) in 2026 and 2.41% (-2) in 2027. The five-year was 2.43% (unch), the 10-year was 2.76% (unch) and the 30-year was 4.24% (unch) at 3 p.m.
The ICE AAA yield curve was narrowly mixed: 2.46% (unch) in 2026 and 2.43% (unch) in 2027. The five-year was at 2.40% (unch), the 10-year was at 2.77% (unch) and the 30-year was at 4.20% (+1) at 4 p.m.
The S&P Global Market Intelligence municipal curve was unchanged: The one-year was at 2.47% (-1) in 2025 and 2.43% (unch) in 2026. The five-year was at 2.43% (unch), the 10-year was at 2.76% (unch) and the 30-year yield was at 4.22% (unch) at 3 p.m.
Bloomberg BVAL was cut up to a basis point: 2.49% (unch) in 2025 and 2.44% (unch) in 2026. The five-year at 2.39% (+1), the 10-year at 2.73% (+1) and the 30-year at 4.14% (+1) at 4 p.m.
Treasuries were little changed.
The two-year UST was yielding 3.486% (flat), the three-year was at 3.529% (flat), the five-year at 3.696% (flat), the 10-year at 4.152% (+1), the 20-year at 4.783% (+1) and the 30-year at 4.828% (+1) near the close.
