Municipals were weaker Wednesday as U.S. Treasuries cheapened and equities ended up.
The two-year muni-UST ratio Wednesday was at 68%, the five-year at 64%, 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 68% and the 30-year at 88% at a 3 p.m. read.
The Investment Company Institute Wednesday reported outflows of $3.634 billion for the week ending Oct. 29, following $1.594 billion of inflows the previous week. This differs from LSEG Lipper's report of $719.9 million of inflows into mutual funds over the same time period.
Exchange-traded funds saw inflows of $5.531 billion after $1.416 billion of inflows the week prior, per ICI data. This is the fourth consecutive week ETF inflows have topped $1 billion.
Munis were cut up to five basis points Wednesday, depending on the scale. However, the market, for the most part, has been steady to slightly firmer over the last two to three weeks, said Kim Olsan, senior fixed income portfolio manager at NewSquare Capital.
"There may be a little consolidation going on, just with govies where they are. They just have to realign that way," she said.
The weakness comes after relative steadiness within the muni market on Monday and Wednesday, as the industry awaited regional election results, Olsan said.
"Generic intermediate yields are holding about five basis points through the last 30 days' average and long-term rates are at parity (near 2.80% and 4.15%, respectively)," she said.
Market participants are focused on the election results and their potential to shift market demand, as several regional election results will likely garner greater attention over the next few months, Olsan said.
On a national level, at least
Texas has the most referendums on the ballot, with 357 items, totaling $110.84 billion, also the largest amount for a state, according to the data, concentrated in school and utility district debt.
Texas school issuance has risen 33% year-over-year, likely due to new facility and upgrade needs and higher construction costs, Olsan said, citing Bloomberg data.
New Jersey and Virginia saw Democratic candidates elected as governor.
"Municipal investors within each state will be watchful for any policy developments that focus on tax increases to fund gubernational initiatives," Olsan said.
Any increase to New Jersey's 10.75% or Virginia's 5.75% top rates will "make in-state credits more valuable (and likely at tighter spreads given already-low supply conditions)," she said.
Perhaps the most significant outcome was the election of Zohran Mamdani as New York City's next mayor. His "victory comes with a focus on social and economic welfare platforms, with tax increases among the considerations," Olsan said.
With that "comes a focus on the city's GO debt, one of the most active within the market," she said.
Among both Republican and Democratic administrations, "the average 20-year NYC GO/AAA spread is 35 basis points (with a range of +26 to +42)," Olsan said.
"The bond's average implied yield in that period carries a low of 2.69% to a high of 5.47%," she said.
The resiliency of the credit over a long cycle in terms of market spread stands out, Olsan said.
"On the day of the mayoral election, a dealer sold a block of NYC GO 5s in 2050 (call 2036) at 4.39%, with a +31/MMD spread," she said.
The market saw a high-grade sale Wednesday with Washington's $765.06 million of GOs in two series, Olsan said.
The state's July sale "saw the ensuing month post a rally of 10-20 basis points out to the 20-year range," she said.
Secondary opportunity for three focus areas — quality, spread and duration — has proven limited in recent weeks, she said.
The running daily total of bid list volume is down around 20% from earlier months in 2025, Olsan said.
Trade data from the Municipal Securities Rulemaking Board show "a steady 60% to 63% of all secondary trades are customer buys — suggestive of inquiry engaged along the curve but particularly past 10 years where the slope remains steep," Olsan said.
Monthly exchange-traded flows from Bloomberg data point to more than $1 billion allocated into long-term strategies last month, second only to national fund intakes, she said.
In the primary market Wednesday, BofA Securities sold $410.53 million of GO refunding bonds. The first tranche, $282.05 million of Series 2025C bonds, saw 5s of 6/2026 at 2.59%, 5s of 2030 at 2.46%, 5s of 2035 at 2.76% and 5s of 2036 at 2.85%, noncall.
The second tranche, $128.445 million of Series 2026A forward delivery bonds, saw 5s of 6/2026 at 2.78%, 5s of 2031 at 2.61% and 5s of 2032 at 2.67%, noncall.
In the competitive market, Washington (Aaa/AA+/AA+/) sold $538.245 million of various purpose GO refunding bonds, to Barclays, with 5s of 1/2026 at 2.62%, 5s of 2030 at 2.49%, 5s of 2035 at 2.82%, and 5s of 2040 at 3.46%, callable 1/1/2036.
The state also sold $226.815 million of motor vehicle fuel tax and vehicle related fees GO refunding bonds, to BofA Securities, with 5s of 1/2026 at 2.67%, 5s of 2030 at 2.47%, 5s of 2035 at 2.85%, and 5s of 2040 at 3.47%, callable 1/1/2036.
AAA scales
MMD's scale was cut up to five basis points: 2.56% (unch) in 2026 and 2.46% (unch) in 2027. The five-year was 2.43% (+5), the 10-year was 2.78% (+4) and the 30-year was 4.18% (+3) at 3 p.m.
The ICE AAA yield curve was cut up to three basis points: 2.55% (unch) in 2026 and 2.47% (+1) in 2027. The five-year was at 2.44% (+3), the 10-year was at 2.78% (+3) and the 30-year was at 4.12% (+2) at 3 p.m.
The S&P Global Market Intelligence municipal curve was cut up to three basis points: The one-year was at 2.55% (unch) in 2025 and 2.46% (unch) in 2026. The five-year was at 2.40% (+2), the 10-year was at 2.76% (+3) and the 30-year yield was at 4.15% (+3) at 3 p.m.
Bloomberg BVAL was cut two to three basis points: 2.54% (+2) in 2025 and 2.49% (+2) in 2026. The five-year at 2.40% (+3), the 10-year at 2.74% (+3) and the 30-year at 4.09% (+2) at 3 p.m.
Treasuries saw losses.
The two-year UST was yielding 3.63% (+5), the three-year was at 3.645% (+6), the five-year at 3.763% (+7), the 10-year at 4.156% (+7), the 20-year at 4.717% (+8) and the 30-year at 4.738% (+7) at 3:15 p.m.
Primary to come
The Los Angeles Department of Water and Power (Aa2//AA-/AA/) is set to price Thursday $977.65 million of water system revenue refunding bonds, Series 2025C. RBC Capital Markets.
Austin (A1/A+//AA-/) is also set to price Thursday $224.115 million of AMT airport system revenue refunding bonds, Siebert Williams Shank.
The Waste Pro USA Project is set to price $200 million of nonrated solid waste disposal revenue bonds through the Florida Development Finance Corp., the Mississippi Business Finance Corp. and the Louisiana Public Facilities Authority. Barclays.
Competitive
King County, Washington, (Aa1/AA+//) is set to sell $267.52 million of sewer revenue and refunding bonds, Series 2025A, at 10:45 a.m. Thursday.
