The correction on the short end continued Friday as U.S. Treasuries cheapened and equities ended mixed.
Muni yields cheapened by up to eight basis points, with the largest losses at the front end.
The two-year MMD reached 3.01%. The last time the two-year MMD was above 3.00% was late April 2025.
UST yields cheapened by five to nine basis points.
Friday was the second day of cuts to the short end.
The UST curve flattened on Wednesday after the Federal Open Market Committee raised rates by 25 basis points and projected another rate hike by the end of the year, MMA Director Kevin McGuigan said.
USTs clawed back a lot of their losses on the front end of the curve on Thursday, McGuigan said, but munis continued to flatten — likely because the muni curve was steeper to begin with.
The Fed's guidance will likely continue to support the long end, McGuigan said, "but at the same time, I do think that investors need to be cautious about extending duration right now, given that a lot of the pressure on the long end has been the result of supply concerns, and ... that's separate from inflation or inflation driving long end yields higher."
Primary to come
Issuance is an estimated $12.228 billion for the week of Sept. 21, with $9.448 billion of negotiated deals on tap and $2.78 billion of competitives, according to LSEG.
Hampton Roads PPV leads the negotiated market with $1.95 billion of military housing taxable revenue bonds across four series.
The competitive market is led by Illinois with $900 of general obligation bonds to be sold across three series.
