Munis continued to see small losses on the front end and small gains out long. U.S. Treasuries were little changed, and equities ended down.
The two-year muni-UST ratio Wednesday was at 70%, the five-year at 66%, the 10-year at 68% and the 30-year at 90%, 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 69% and the 30-year at 90% at a 4 p.m. read.
The Investment Company Institute Wednesday reported inflows of $918 million for the week ending Oct. 15, following $369 million of inflows the previous week.
Exchange-traded funds saw inflows of $1.174 billion after $2.253 billion of inflows the week prior, per ICI data.
Munis entered the fourth quarter in "excellent shape," said GW&K strategists.
"Nominal yields remain well above their 10- and 20-year averages," and the curve is still steep enough — despite recent flattening — to offer "meaningful expected return from roll," they said.
In the near term, technicals are mixed, according to GW&K strategists.
While supply has moderated from its "torrid pace" at the start of the year, it is still up 10% year-over-year, while reinvestment flows should remain "muted" until December, they said.
"Ratios at the front end are stretched, leaving less cushion if broader yields back up, but value persists in intermediate and longer maturities, where roll and carry do more of the work," GW&K strategists said.
Meanwhile, the tax-exempt market is expected to be "biased higher" in the coming weeks and months as the expected heavy pace of issuance this month will not be as "oppressive" as feared, said Pat Luby, head of municipal strategy at CreditSights.
Demand has been consistent, and long bonds have been the best performer for the last two weeks and lead month-to-date, same as in September, he said.
"Assuming a continuation of the current steady level of demand, we expect prices to be biased higher," Luby said.
Historically, September and October have not been the "kindest months" to muni investors, he said.
From 2010 to 2024, "the average total returns for the ICE Muni Index in September and October were the 11th and 12th ranked months of the year, respectively," with both months seeing average monthly losses of 0.24%, Luby said, noting the muni index has seen gains of 1.17% month-to-date.
If that holds, this would be the first time in six years that October posted positive total returns and the best for the month since at least 2009, he said. October 2013 saw the current high return for the month of 0.94%.
"In the past, as supply pressure from the new issue market has tapered off in the last two months of the year, average monthly performance has improved," Luby said.
From 2010 to 2024, the muni index has returned an average of 0.88% in November, the best month of the year, and 0.32% in December, the fifth-best month of the year, he said.
In the primary market Wednesday, J.P. Morgan priced for the New Jersey Transportation Trust Fund Authority (A1/A/A/A/) $1.5 billion of transportation program bonds, 2025 Series AA, with 5s of 6/2030 at 2.63%, 5s of 2035 at 3.04%, 5s of 2040 at 3.64%, 5s of 2045 at 4.22%, 5s of 2050 at 4.52%, 5.25s of 2050 at 4.43% and 5s of 2055 at 4.61%, callable 12/15/2035.
BofA Securities priced for the Kentucky State Property and Buildings Commission (Aa3//AA-/) $940.4 million of Project No. 133 revenue bonds. The first tranche, $775 million of Series A bonds, saw 5s of 9/2026 at 2.69%, 5s of 2030 at 2.67%, 5s of 2035 at 3.04%, 5s of 2040 at 3.61% and 5s of 2045 at 4.13%, callable 9/1/2035.
The second tranche, $165.4 million of Series B refunding bonds, saw 5s of 9/2026 at 2.69%, 5s of 2030 at 2.67% and 5s of 2035 at 3.04%, noncall.
Morgan Stanley priced for the California Community Choice Financing Authority (Aa2///) $850 million of green clean energy project revenue bonds, Series 2025F, with 5s of 11/2033 at 3.55%, callable 8/1/2033.
CUSIP requests fall
In September, the aggregate total of identifier requests for new municipal securities — including municipal bonds, long-term and short-term notes, and commercial paper — fell 20.6% versus August totals.
On a year-over-year basis, overall municipal volumes were up 17.3% through the end of September.
Texas led state-level municipal request volume with a total of 165 new CUSIP requests in September, followed by New York (114) and California (68).
For the specific category of municipal bonds, there was a drop of 18.2% month-over-month, but these requests are still up 17.6% year-over-year.
AAA scales
MMD's scale was bumped eight years and out: 2.51% (+2) in 2026 and 2.41% (+2) in 2027. The five-year was 2.34% (unch), the 10-year was 2.70% (-2) and the 30-year was 4.10% (-1) at 3 p.m.
The ICE AAA yield curve was mixed: 2.46% (+1) in 2026 and 2.38% (+1) in 2027. The five-year was at 2.37% (+1), the 10-year was at 2.73% (-1) and the 30-year was at 4.08% (unch) at 3 p.m.
The S&P Global Market Intelligence municipal curve was little changed: The one-year was at 2.48% (+2) in 2025 and 2.40% (+2) in 2026. The five-year was at 2.34% (unch), the 10-year was at 2.71% (-1) and the 30-year yield was at 4.08% (-1) at 3 p.m.
Bloomberg BVAL was bumped eight years and out: 2.46% (+2) in 2025 and 2.40% (+2) in 2026. The five-year at 2.32% (+2), the 10-year at 2.69% (-3) and the 30-year at 4.04% (-2) at 4 p.m.
Treasuries were little changed.
The two-year UST was yielding 3.443% (-1), the three-year was at 3.446% (-1), the five-year at 3.552% (-1), the 10-year at 3.954% (-1), the 20-year at 4.512% (-1) and the 30-year at 4.54% (flat) near the close.
Primary to come
The Sacramento City Unified School District, California, (/AA//) is set to price Thursday $451.88 million of GO bonds, consisting of $262.5 million of GO 2020 Election (Measure H) bonds, Series C; $143 million of GO 2024 Election (Measure D) bonds, Series A; $9.855 million of 2025 GO refunding bonds, Series A; and $36.525 million of 2025 GO refunding bonds, Series B. Loop Capital Markets.
The Oklahoma City Water Utilities Trust (Aaa/AAA//) is set to price Thursday $185.91 million of utility system revenue refunding and improvement bonds. Morgan Stanley.
The Glendale Industrial Development Authority, Arizona, (/AA-/AA/) is set to price Thursday $150 million of Midwestern University revenue. Raymond James.
The Village Community Development District No. 16, Florida, is set to price Thursday $127 million of nonrated special assessment revenue bonds. Jefferies.
The Colorado Health Facilities Authority (/A-//) is set to price Thursday $125 million of Craig Hospital Project hospital revenue bonds, consisting of $105 million of Series A and $20 million of Series B. RBC Capital Markets.
The South Carolina Student Loan Corp. (/AA//) is set to price Thursday $112.1 million of taxable senior student loan revenue bonds, Series 2025A. RBC Capital Markets.
Oregon (Aa1/AA+/AA+/) is set to price Thursday $109.44 million of GOs, Series 2025K. Morgan Stanley.
Competitive
Suffolk County, New York, (/AA-/AA-/) is set to sell $188.735 million of public improvement serial bonds, Series 2025A, at 11 a.m. Thursday.
Henrico County, Virginia, (///AAA/) is set to sell $125 million of water and sewer system revenue bonds, Series 2025D, at 10:30 a.m. Thursday.
