Municipals were firmer Monday as U.S. Treasuries fell slightly out long, and equities ended up.
The two-year muni-UST ratio Monday was at 62%, the five-year at 65%, the 10-year at 77% and the 30-year at 96%, according to Municipal Market Data's 3 p.m. ET read. ICE Data Services had the two-year at 62%, the five-year at 65%, the 10-year at 75% and the 30-year at 95% at a 4 p.m. read.
The firmness Monday follows munis strengthening last week, with the largest gains on Friday after a weaker-than-expected jobs report, and growing expectations for a Federal Reserve rate cut.
The underperforming jobs figure for July, coupled with steep downward revisions to numbers for both May and June, saw muni yields fall as many investors moved to safe haven assets, said Jason Wong, vice president of municipals at AmeriVet Securities.
Munis rallied four to seven basis points, depending on the curve, on Friday in the wake of the announcement, but underperformed the rally in Treasuries.
"If the narrative takes hold that the Fed is behind the eight ball and will need to cut rates several times in the coming months to catch up to the realities of a weaker economy, we expect muni yields will drift lower alongside Treasuries," Birch Creek strategists said.
But with the "record pace of new issue supply" showing no signs of slowing down, Birch Creek strategists are predicting that ratios may remain elevated when compared to historical averages.
With Friday's news, and "August typically being the month with the second strongest reinvestment demand ($59 billion in principal and interest redemption), we could see positive returns for the month of August as many investors want to lock in higher rates before a potential September rate cut," Wong said.
Overall, market sentiment was on the upswing last week, especially out long where "dealers reported strong interest from crossover accounts for clean blocks of high-grade paper within 15 bps of a 5% yield," said Birch Creek strategists.
Muni mutual funds saw a second consecutive week of inflows according to LSEG Lipper, which reported positive flows of $937.3 million after $567.6 million the week prior.
Bids wanteds ticked up week-over-week as J.P. Morgan reported a 17% jump in sale lists relative to the previous five-week average, per Birch Creek.
Dealers also noted "sparse demand" from separately managed accounts in two to 20 years, they said.
In the primary market Monday, Piper Sandler priced for the Terrell Independent School District, Texas, (Aaa/AAA//) $262.205 million of PSF-insured unlimited tax school building bonds, with 5s of 8/2028 at 2.58%, 5s of 2030 at 2.69%, 5s of 2035 at 3.54%, 5s of 2040 at 4.30%, 5.25s of 2045 at 4.64%, 5.25s of 2050 at 4.78% and 5.25s of 2055 at 4.82%, callable 8/1/2035.
RBC Capital Markets priced for the Crowley Independent School District, Texas, (Aaa//AAA/) $248.23 million of PSF-insured unlimited tax school building bonds, with 5s of 2/2031 at 2.88%, 5s of 2035 at 3.53%, 5s of 2040 at 4.26%, 5.25s of 2045 at 4.67%, 5.25s of 2050 at 4.78% and 5.25s of 2056 at 4.83%, callable 2/1/2035.
AAA scales
MMD's scale was bumped up to three basis points: The one-year was at 2.29% (-3) and 2.29% (-3) in two years. The five-year was at 2.43% (-3), the 10-year at 3.23% (-2) and the 30-year at 4.60% (unch) at 3 p.m.
The ICE AAA yield curve was bumped one to two basis points: 2.33% (-1) in 2026 and 2.28% (-2) in 2027. The five-year was at 2.46% (-2), the 10-year was at 3.18% (-2) and the 30-year was at 4.57% (-1) at 4 p.m.
The S&P Global Market Intelligence municipal curve was bumped up to three basis points: The one-year was at 2.29% (-3) in 2025 and 2.30% (-3) in 2026. The five-year was at 2.43% (-3), the 10-year was at 3.22% (-3) and the 30-year yield was at 4.60% (unch) at 4 p.m.
Bloomberg BVAL was bumped one to two basis points: 2.28% (-2) in 2025 and 2.29% (-2) in 2026. The five-year at 2.42% (-2), the 10-year at 3.16% (-2) and the 30-year at 4.56% (-1) at 4 p.m.
Treasuries were slightly firmer out long.
The two-year UST was yielding 3.691% (+1), the three-year was at 3.655% (flat), the five-year at 3.748% (-1), the 10-year at 4.201% (-2), the 20-year at 4.772% (-2) and the 30-year at 4.797% (-3) near the close.
Primary to come
New York City (Aa2/AA/AA/AA+/) is set to price Wednesday $1.785 billion of GOs, consisting of $1.548 billion of tax-exempts and $237.32 million of taxables. BofA Securities.
The Florida Development Finance Corp. is set to price $985 million of non-rated revenue bonds (Brightline Florida Passenger Rail Expansion Project), Series 2025B. Morgan Stanley.
The Massachusetts Development Finance Agency (A3/A//) is set to price Tuesday $886.03 million of
Colorado Springs, Colorado, (Aa2/AA+//) is set to price Wednesday $750 million of new-issue and refunding utilities system improvement revenue bonds. Goldman Sachs.
The Port of Seattle (Aa3/AA-/AA-/) is set to price Wednesday $738.275 million of intermediate lien revenue bonds. Morgan Stanley.
The Triborough Bridge and Tunnel Authority (Aa3/AA-/AA-/AA/) is set to price Tuesday $721.38 million of general revenue bonds. Morgan Stanley.
The Lower Colorado River Authority (A1/A/A+//) is set to price Wednesday $526.105 million of transmission contract refunding and improvement revenue bonds (LCRA Transmission Services Corporation Project), Series 2025A. Wells Fargo.
The Illinois Municipal Electric Agency (A1/AA/AA-/) is set to price Wednesday $476.945 million of Assured Guaranty-insured power supply system revenue refunding bonds, Series 2025A. BofA Securities.
The South Miami Health Facilities Authority, Florida, (/AA-//) is set to price Tuesday $468.625 million of revenue bonds (Baptist Health South Florida Obligated Group). BofA Securities.
Sacramento County, California, (A2/A+//) is set to price Tuesday $412.765 million of airport system senior revenue bonds. BofA Securities.
Jacksonville, Florida, (/AA/AA+/AA) is set to price Tuesday $354.51 million of special revenue bonds. Ramirez.
Atlanta (A2//A/) is set to price Tuesday $240.14 million of taxable and non-AMT airport customer facility charge revenue bonds. RBC Capital Markets.
The Frisco Independent School District, Texas, (Aaa/AAA//) is set to price Wednesday $208.97 million of PSF-insured unlimited tax refunding bonds, Series 2025A. RBC Capital Markets.
The New Jersey Housing and Mortgage Finance Agency is set to price Thursday $200 of non-AMT social multi-family revenue bonds. Barclays.
The Tigard-Tualatin School District No. 23J, Oregon, (/AA+//) is set to price Tuesday $200 million of Oregon School Bond Guaranty Act-insured GOs. Piper Sandler.
The Austin Community College District, Texas, (Aa1/AA+//) is set to price Tuesday $190 million of limited tax and refunding bonds. Jefferies.
Beth Israel Lahey Health (A3/A//) is set to price Tuesday $180 million of taxable bonds, Series O. Goldman Sachs.
The Delaware State Housing Authority (Aa1///) is set to price Tuesday $150 million of taxable and non-AMT senior single-family mortgage revenue bonds. J.P. Morgan.
The Nebraska Investment Finance Authority (/AAA//) is set to price Wednesday $137.285 million of single-family housing revenue bonds. J.P. Morgan.
The Medina Valley Independent School District, Texas, (/AAA//) is set to price Wednesday $132 million of PSF-insured unlimited tax school building bonds. Raymond James.
The Wisconsin Public Finance Authority is set to price Wednesday $129.205 million of non-rated Texas Infrastructure Program tax-exempt revenue anticipation capital appreciation bonds (Heritage Bend Project). Piper Sandler.
The Dormitory Authority of the State of New York (/A-/A+/) is set to price Thursday $124.61 million of fixed-rate revenue bonds (Roswell Park Cancer Institute Obligated Group), Series 2025A. Morgan Stanley.
The Argyle Independent School District, Texas, (Aaa///) is set to price Tuesday $120.275 million of PSF-insured unlimited tax school building bonds, Series 2025A. BOK Financial.
Texas (/AAA/AAA/) is set to price Friday $104.685 million of GOs. J.P. Morgan.
The Florida Municipal Power Agency (A2//AA-/) is set to price Tuesday $104.67 million of all-requirements power supply project revenue bonds, Series 2025A. J.P. Morgan.
Competitive
Massachusetts (Aa1/AA+/AA+/) is set to sell $450 million of GO consolidated loan of 2025 bonds, Series 2025F, at 10:30 a.m. Eastern Tuesday, and $300 million of GO consolidated loan of 2025 bonds, Series E, at 10 a.m. Tuesday.
The Louisville and Jefferson County Metropolitan Sewer District, Kentucky, (Aa3/AA//) is set to sell $289.08 million of sewer and drainage system revenue and refunding revenue bonds, Series 2025A, at 10 a.m. Tuesday.
The San Diego City Public Facilities Financing Authority, California, (Aa2//AA/) is set to sell $237.305 million of senior water revenue bonds, Series 2025A, at 11 a.m. Wednesday.
The Denver Board of Water Commissioners, Colorado, (Aaa/AAA//) is set to sell $194.16 million of water revenue refunding bonds, Series 2025A, at 10:30 a.m. Tuesday.
Fort Worth, Texas, (Aa3//AA/) is set to sell $107.19 million of general purpose bonds at 10:30 a.m. on Tuesday.
Wisconsin (/AAA/AAA/) is set to sell $100 million of green Environmental Improvement Fund revenue bonds, Series 2025A, at 10:45 a.m. Tuesday.
Cranston, Rhode Island, is set to sell $100 million of 2025 GO anticipation notes, Series 1, at 11:30 a.m. Wednesday.
