Municipals were slightly firmer Tuesday amid a busy new-issue calendar, as short-term U.S. Treasury yields rose and equities ended down.
After a rally on Friday and continued strength at the start of the week, "municipals will attempt to catch up a bit from Friday's underperformance, [specifically] up front where muni-UST yield ratios reset as much as two ratios higher," said Matt Fabian, partner at Municipal Market Analytics.
The two-year muni-UST ratio Tuesday was at 61%, the five-year at 64%, the 10-year at 76% 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 61%, the five-year at 65%, the 10-year at 75% and the 30-year at 95% at a 4 p.m. read.
Over the past three trading sessions, MMD yields have been bumped nine to 12 basis points, while UST yields have fallen over 20 basis points on the front of the curve.
"As a result of the recent underperformance, relative yields have increased to attractive levels in our opinion, especially for the longer-portion of the curve," said Cooper Howard, a fixed-income strategist at Charles Schwab. "We suggest investors target a benchmark duration but more risk-tolerant investors may want to consider longer-term munis since their yields are near historic levels."
It would not be surprising "if [muni] yields continue to move lower in sympathy with Treasury yields, [as] Friday's jobs report was a turning point in our view in that it showed that the economy is slowing down," he said.
"Additionally, we expect the Fed[eral Reserve] to cut two times this year, beginning in September, which should pull short-term yields lower," Howard said.
This week's calendar is scheduled for "roughly $17 billion to $20 billion of new paper, [with] that total apt to rise if more issuers look to take advantage of the stronger curve with more current refundings," Fabian said.
The market should be able to accommodate this as "year-to-date issuance is at roughly $341 billion, with 19% of that from refundings," he said. "The percentage [is] down slightly from last year but par almost exactly tracking 2024 despite nominal yields being notably higher since 2Q25."
Refundings have "featured" more issuers, causing near-term budget space amid growing deficits/volatility, he said.
"Further, although the industry hopes to get tax-exempt advance refunding restoration included in Republicans' proposed second reconciliation legislation, the timing of the latter (fall) and its still low likelihood suggests this isn't something for issuers to wait for," he said.
For the year so far, investor demand "has been fully adequate to take down the new calendar, with SMA front end buyers increasingly backstopped by theoretically more opportunist funds and ETFs," Fabian said, adding, this trend is unlikely to change even with elevated supply.
However, it will be more difficult for "tax-exempts to consistently track any UST rally on further dovish Fed developments, he said. Therefore, munis are likely to underperform UST rallies.
In the primary market Tuesday, Morgan Stanley priced for the Triborough Bridge and Tunnel Authority (Aa3/AA-/AA-/AA/) $729.365 million of general revenue bonds. The first tranche, $500 million of Series 2025A-1 bonds, saw 5s of 11/2035 at 3.41%, 5s of 2040 at 4.21%, 5s of 2045 at 4.69%, 5.25s of 2050 at 4.81% and 5.25s of 2055 at 4.84%, callable 11/15/2035.
The second tranche, $229.365 million of refunding Series 2025A-2 bonds, saw 5s of 11/2030 at 2.44%, 5s of 2035 at 3.41%, 5s of 2040 at 4.21%, 5s of 2045 at 4.69% and 5s of 2046 at 4.78%, callable 11/15/2035.
BofA Securities priced for Sacramento County, California, $502.875 million of airport system revenue bonds. The first tranche, $324.855 million of senior AMT bonds, Series 2025A, (A2/A+//) saw 5s of 7/2029 at 2.96%, 5s of 2030 at 3.11%, 5s of 2035 at 4.01%, 5s of 2040 at 4.67%, 5.25s of 2045 at 4.98%, 5.25s of 2050 at 5.10% and 5.25s of 2055 at 5.14%, callable 7/1/2035.
The second tranche, $33.725 million of senior non-AMT refunding bonds, Series 2025B, (A2/A+//) saw 5s of 7/2039 at 3.96% and 5s of 2040 at 4.08%, callable 7/1/2035.
The third tranche, $6.565 million of senior non-AMT private-activity refunding bonds, Series 2025C, (A2/A+//) saw 5s of 7/2031 at 2.56%, 5s of 2035 at 3.30% and 5s of 2038 at 3.83%, callable 7/1/2035.
The fourth tranche, $93.02 million of subordinate AMT bonds, Series 2025D, (A1/AA//) saw 5s of 7/2029 at 3.02%, 5s of 2030 at 3.18%, 5s of 2035 at 4.09%, 5s of 2040 at 4.72%, 5.25s of 2045 at 5.03%, 5.25s of 2050 at 5.14% and 5.25s of 2055 at 5.19%, callable 7/1/2035.
The fifth tranche, $31.69 million of subordinate non-AMT refunding bonds, Series 2025E, (A2/A+//) saw 5s of 7/2035 at 3.31% and 5s of 2038 at 3.85%, callable 7/1/2035.
The sixth tranche, $13.02 million of subordinate non-AMT private activity refunding bonds, Series 2025F, with 5s of 7/2031 at 2.57% and 5s of 2035 at 3.31%, noncall.
BofA Securities priced for the South Miami Health Facilities Authority, Florida, (A3/AA-//) $459.345 million of Baptist Health Southern Florida Obligated Group. The first tranche, $259.545 million of Series 2025A, saw 5s of 8/2032 at 3.29% and 5s of 2035 at 3.76%, noncall.
The second tranche, $199.8 million of Series 2025B, saw 5s of 8/2065 with a tender date of 8/15/2030 at 3.09%, callable 5/15/2030.
Ramirez priced for Jacksonville, Florida, (/AA/AA+/AA/) $343.245 million of special revenue bonds, with 5s of 10/2027 at 2.34%, 5s of 2030 at 2.53%, 5s of 2035 at 3.44%, 5s of 2040 at 4.2% and 5s of 2045 at 4.70%, callable 10/1/2035.
J.P. Morgan priced for the Florida Municipal Power Agency (A2//AA-/) $208.83 million of all-requirements power supply project revenue bonds, Series 2025A, with 5s of 10/2025 at 2.51%, 5s of 2030 at 2.73% and 5s of 2035 at 3.59%, callable 10/1/2033.
Jefferies priced for the Austin Community College District, Texas, (Aa1/AA+//) $188.86 million of limited tax and refunding bonds, with 5s of 8/2033 at 3.14%, 5s of 2035 at 3.50%, 5s of 2040 at 4.20%, 5s of 2045 at 4.70%, 5.25s of 2050 at 4.83% and 5.25s of 2055 at 4.88%, callable 8/1/2034.
In the competitive market, Massachusetts (Aa1/AA+/AA+/) sold $450 million of GO consolidated loan of 2025 bonds, Series 2025F, to Morgan Stanley, with 5s of 8/2044 at 4.49%, 5s of 2045 at 4.55%, 5s of 2050 at 4.72% and 5s of 2055 at 4.79%, callable 8/1/2035.
The state also sold $300 million of GO consolidated loan of 2025 bonds, Series E, to Raymond James, with 5s of 8/2028 at 2.31%, 5s of 2030 at 2.45%, 5s of 2035 at 3.27%, 5s of 2040 at 4.05% and 5s of 2043 at 4.42%, callable 8/1/2035.
The Louisville and Jefferson County Metropolitan Sewer District, Kentucky, (Aa3/AA//) sold $289.08 million of sewer and drainage system revenue and refunding revenue bonds, Series 2025A, to Wells Fargo, with 5s of 5/2026 at 2.39%, 5s of 2030 at 2.55%, 5s of 2035 at 3.37%, 5s of 2040 at 4.16%, 5s of 2045 at 4.69%, 5s of 2050 at 4.85% and 5s of 2055 at 4.90%, callable 11/15/2035.
The Denver Board of Water Commissioners (Aaa/AAA//) sold $189.45 million of water revenue refunding bonds, Series 2025A, to Truist Securities, with 5s of 9/2026 at 2.32%, 5s of 2030 at 2.45%, 5s of 2035 at 3.28%, 5s of 2040 at 4.00%, 5s of 2045 at 4.51%, 5s of 2050 at 4.67% and 5s of 2055 at 4.70%, callable 9/15/2035.
Wisconsin (/AAA/AAA/) sold $100 million of green Environmental Improvement Fund revenue bonds, Series 2025A, to Truist Securities, with 5s of 6/2027 at 2.29%, 5s of 2030 at 2.43% and 5s of 2034 at 3.08%, callable 3/1/2034.
AAA scales
MMD's scale was bumped two basis points: The one-year was at 2.27% (-2) and 2.27% (-2) in two years. The five-year was at 2.41% (-2), the 10-year at 3.21% (-2) and the 30-year at 4.58% (-2) at 3 p.m.
The ICE AAA yield curve was bumped two to four basis points: 2.30% (-3) in 2026 and 2.24% (-3) in 2027. The five-year was at 2.42% (-4), the 10-year was at 3.15% (-3) and the 30-year was at 4.55% (-2) at 4 p.m.
The S&P Global Market Intelligence municipal curve was bumped two basis points: The one-year was at 2.27% (-2) in 2025 and 2.28% (-2) in 2026. The five-year was at 2.41% (-2), the 10-year was at 3.20% (-2) and the 30-year yield was at 4.58% (-2) at 4 p.m.
Bloomberg BVAL was bumped one basis point: 2.26% (-1) in 2025 and 2.28% (-1) in 2026. The five-year at 2.41% (-1), the 10-year at 3.15% (-1) and the 30-year at 4.55% (-1) at 4 p.m.
Treasuries cheapened slightly on the front end.
The two-year UST was yielding 3.72% (+4), the three-year was at 3.678% (+3), the five-year at 3.766% (+3), the 10-year at 4.203% (+1), the 20-year at 4.758% (-1) and the 30-year at 4.778% (-1) 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.
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 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 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 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.
Competitive
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.
Cranston, Rhode Island, is set to sell $100 million of 2025 GO anticipation notes, Series 1, at 11:30 a.m. Wednesday.
