Municipals were steady ahead of the Veterans Day holiday, while U.S. Treasuries weakened and equities rallied on the possible end of the
A resolution to the shutdown is "potentially close at hand," after eight Senate Democrats joined Republicans on Sunday in a "push to advance a short-term funding measure that would extend government funding through January," said Tim Iltz, fixed income credit and market analyst at HJ Sims.
However, the legislation still needs a final vote by the Senate and must pass the House before the shutdown can end, he noted.
Following this news, UST yields rose, with the 10-year pushed higher as much as five basis points to near 4.15% at one point during the day amid optimism the government will soon reopen, Iltz said.
Caution is also "warranted" as the reopening may trigger volatility, as the market deals with a surge of delayed data releases, he said.
"This absence of government data has made policymakers more cautious about cutting rates, which will likely fade as data is released upon re-opening," Iltz said.
The Fed funds futures market is currently pricing in a 65% chance of a 25 basis-point cut in December, down from the implied probability of nearly 95% several weeks ago, he said.
The two-year muni-UST ratio Monday was at 69%, the five-year at 65%, 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 69%, the five-year at 66%, the 10-year at 67% and the 30-year at 88% at a 4 p.m. read.
Volume for the year topped the $500 billion mark last week, with this week's $8.616 billion of supply set to break 2024's record $507.584 billion.
Some of the most active sectors have been education (+29%), GOs (+17%) and healthcare (+17%), said Kim Olsan, senior fixed income portfolio manager at NewSquare Capital.
At the state level, more "prolific issuers" like California and New York lag the national annual increase, with supply increases of 5% to 10%, she said.
Select high-grade general market states have had less supply — Florida is down 19% and Washington is off 5% — which is holding tighter spreads, Olsan said.
"Overall, the theme is constructive given how well most issues have been distributed into favorable taxable equivalent yields," she said.
The market navigated its way through last week's heavy slate of issuance, one of the few remaining large weeks of volume for the year, due to strong demand, said Daryl Clements, a portfolio manager at AllianceBernstein.
Mutual funds saw inflows of $1.266 billion last week, with longer-dated funds "reaping the lion's share" of those positive flows, he said, citing LSEG Lipper data.
The market has "benefited" from consistent demand over the past few weeks, he said.
Positive flows last week were the sixth straight week of inflows, 11th out of the last 12, and 14th out of the last 16, Clements said.
Demand has been a "key contributor" to the 3.66% return of the index since Aug. 29, he said, though performance has not been "uniform" across the curve."
Short-maturity bonds have underperformed longer-maturity bonds, leading to the former having cheapened significantly, Clements said.
AAA scales
MMD's scale was unchanged: 2.54% in 2026 and 2.46% in 2027. The five-year was 2.41%, the 10-year was 2.75% and the 30-year was 4.14% at 3 p.m.
The ICE AAA yield curve was little changed: 2.55% (unch) in 2026 and 2.48% (unch) in 2027. The five-year was at 2.43% (+1), the 10-year was at 2.76% (unch) and the 30-year was at 4.11% (unch) at 4 p.m.
The S&P Global Market Intelligence municipal curve was little changed: The one-year was at 2.54% (unch) in 2025 and 2.44% (unch) in 2026. The five-year was at 2.40% (+1), the 10-year was at 2.75% (unch) and the 30-year yield was at 4.12% (unch) at 3 p.m.
Bloomberg BVAL was unchanged: 2.52% in 2025 and 2.47% in 2026. The five-year at 2.38%, the 10-year at 2.71% and the 30-year at 4.05% at 4 p.m.
Treasuries were weaker in spots.
The two-year UST was yielding 3.59% (+3), the three-year was at 3.597% (+3), the five-year at 3.712% (+3), the 10-year at 4.113% (+2), the 20-year at 4.682% (+1) and the 30-year at 4.704% (flat) near the close.
Primary to come
Chicago (/A+/A+/A+/) is set to price Thursday for O'Hare International Airport $1.566 billion of general airport senior lien revenue bonds, consisting of $1.064 billion of AMT Series E bonds, $479.955 million of non-AMT Series F bonds, and $22.1 million of AMT Series G refunding bonds. Jefferies.
The Black Belt Energy Gas District (A2///) is set to price Wednesday $995 million of gas project revenue bonds, 2025 Series G. Goldman Sachs.
Miami-Dade County, Florida, (Aa3/AA/AA-/AA/) is set to price Thursday $975.915 million of water and sewer system revenue bonds, consisting of $570.55 million of Series A bonds and $405.365 million of Series B refunding bonds. Wells Fargo.
The Los Angeles Municipal Improvement Corp. (/A+/AA//) is set to price Thursday for the Los Angeles Convention Center $967.705 million of lease revenue bonds, consisting of $850.9 million of tax-exempt Series 2025-A and $116.805 million of taxable Series 2025-B bonds. Morgan Stanley.
The Washington State Housing Finance Commission (//BB//) is set to price Wednesday $597.33 million of nonprofit housing revenue and refunding bonds (Horizon House Project), consisting of $404.78 million of Series A, $36.175 million of Series B1, $36.15 million of Series B2 and $130.255 million of Series B3. Ziegler.
The National Finance Authority is set to price Thursday $359.841 million of municipal certificates, consisting of $307.215 million of Series 2025-3, Class A-1; $45.43 million of Series 2025-3, Class A-2; and $7.196 million of Series 2025-3, Class B. Jefferies.
The University of Delaware is set to price Thursday $310.375 million of tax-exempt bonds, Series 2025A. Barclays.
The Central Florida Expressway Authority (Aa3/AA-//) is set to price Thursday $277.21 million of senior lien revenue bonds, Series 2025A. BofA Securities.
Franklin County, Ohio, (Aa2//AA/) is set to price Wednesday $233.46 million of hospital refunding and improvement revenue bonds (Nationwide Children's Hospital), Series 2025A. J.P. Morgan.
The Monroe County Industrial Development Corp. (Aa3/AA-//) is set to price Thursday $223.215 million of revenue bonds (University of Rochester Project), consisting of $122.445 million of non-AMT Series 2025A bonds and $100.77 million of taxable Series 2025B bonds. BofA Securities.
The Santa Monica-Malibu Unified School District, California, (Aa1/AA+//) is set to price Thursday $130 million of GOs, consisting of $127.675 million of tax-exempts and $2.325 million of taxables. Baird.
The Ohio Housing Finance Agency (Aa1///) is set to price Wednesday $130 million of non-AMT social residential mortgage revenue bonds (Mortgage-Backed Securities Program), 2025 Series D. Raymond James.
The Ohio County Commission, West Virginia (/BBB//) is set to price Wednesday $107.325 million of special district excise tax refunding and improvement revenue bonds (Fort Henry Economic Opportunity Development District — The Highlands Project), Series 2025 A. Piper Sandler.
Competitive
Dallas (/AA-/AA/) is set to sell $230.875 million of GOs, Series 2025, at 11:15 a.m. Eastern Wednesday.
The Virginia Housing Development Authority (Aa1/AA+//) is set to sell $102.78 million of non-AMT rental housing bonds, 2025 Series F, 11 a.m. Thursday.
