Municipals were steady Wednesday as U.S. Treasury yields rose slightly and equities ended down.
The two-year muni-UST ratio Wednesday was at 70%, the five-year at 70%, the 10-year at 74% and the 30-year at 91%, according to Municipal Market Data's 3 p.m. ET read. ICE Data Services had the two-year at 69%, the five-year at 71%, the 10-year at 73% and the 30-year at 90% at 4 p.m.
Following President Donald Trump's "
There were record outflows from exchange-traded funds and extreme yield volatility, with muni yields, at one point, rising nearly 100 basis points over a three-day period, he noted.
Since then, there has been a reversal, according to Holtz.
There have been three consecutive weeks of inflows, "things are well bid and things are very orderly," he said.
The Investment Company Institute Wednesday reported $1.435 billion of inflows for the week ending May 21, following $1.092 billion of inflows the previous week.
Exchange-traded funds saw inflows of $595 million after $450 million of inflows the week prior, per ICI data.
Supply has weighed on munis to some extent over the past few weeks, as week after week issuance tops $10 billion, Holtz said.
Through 22 weeks, issuance is at $213 billion, up $21 billion year-over-year, and "last week — reasonably ahead of this week's holiday — saw the biggest new issue calendar of the year at $14.9 billion," said Matt Fabian, a partner at Municipal Market Analytics.
Issuance, though, usually drops off in the summer, Holtz said.
"What we're used to seeing is … a bit of supply in June and then July and August, you get a little bit of a breather at times," he noted.
Last year was an anomaly and saw a record amount of supply, Holtz said, noting he believes this summer will look similar to 2024.
"Usually, we have this really positive technical backdrop. Even though in June, you get some supply, in July and August, it tapers off, but you have a lot of reinvestment. There's a lot of cash that needs to be put to work over the summer months," he said.
Summer technicals may still be strong this year, but an influx of supply may "neutralize it," Holtz said.
On the demand side, the backdrop for municipalities is strong, he said.
And while muni demand is "still unduly reliant on retail buyers via SMAs and ETFs those two segments have continued to show deep interest at current yield levels, which last week included long NYCs at a 4.85%, long CA GOs at a 4.60%. For high yield, long Ohio Buckeyes traded to a 6.00%," Fabian said.
Helping demand and liquidity is that the next three months will see more than $100 billion in reinvestment, Fabian said.
"Things aren't perfect: Harvard and a handful of blue cities/states face federal aid cutbacks, all states are seeing nascent economic stress from tariffs, immigrant deportations, and federal employee layoffs, and tax reform plans will push more costs on states, plus hurricane season is starting with an enfeebled FEMA," he said.
Importantly, Fabian said, "scaled-up institutional demand has not yet materialized, so non-retail bonds and structures may struggle with liquidity, especially amid headline developments or new threats."
"It follows that tax-exempt yields/spreads are biased stable/wider near term despite overall market strengths at present," he said.
In the primary market Wednesday, Jefferies priced for the Board of Trustees of Michigan State University (Aa2/AA//) $370.4 million of general revenue refunding bonds, Series 2025A, with5s of 8/2026 at 2.87%, 5s 2/2030 at 2.99%, 5s of 8/2030 at 2.99%, 5s of 2/2035 at 3.54%, 5s of 8/2035 at 3.55%, 5s of 2/2040 at 4.15%, 5s of 8/2040 at 4.15%, 5s of 2/2045 at .57%, 5.25s of 2/2050 at 4.72% and 5s of 2/2055 at 4.84%, callable 8/15/2035.
BofA Securities priced for the Hawaii Department of Budget and Finance (/AA-/AA/) $311.975 million of the Queen's Health Systems special purpose revenue bonds, Series A, with 5s of 7/2026 at 2.98%, 5s of 2030 at 3.18%, 5s of 2035 at 3.72%, 5s of 2040 at 4.35% and 5s of 2043 at 4.65%, callable 7/1/2035.
Raymond James priced for the Lewisville Independent School District, Texas, (/AAA/AAA/) $283.465 million of PSF-insured unlimited tax school building and refunding bonds, with 5s of 8/2026 at 2.92%, 5s of 2030 at 3.00%, 5s of 2035 at 3.57%, 5s of 2040 at 4.11% and 5s of 2045 at 4.52%, callable 8/15/2034.
RBC Capital Markets priced for the California Health Facilities Finance Authority (Aa3/AA/AA/) $155.055 million of El Camino Health revenue refunding bonds, Series 2025A, with 5s of 2/2026 at 2.88%, 5s of 2030 at 2.98%, 5s of 2035 at 3.49%, 5s of 2040 at 4.13%, 4.5s of 2045 at 4.75% and 5.25s of 2048 at 4.68%, callable 2/1/2035.
AAA scales
MMD's scale was bumped up to one basis point: The one-year was at 2.81% (-1) and 2.79% (-1) in two years. The five-year was at 2.86% (-1), the 10-year at 3.33% (-1) and the 30-year at 4.52% (unch) at 3 p.m.
The ICE AAA yield curve was little changed: 2.82% (unch) in 2026 and 2.74% (unch) in 2027. The five-year was at 2.88% (unch), the 10-year was at 3.27% (unch) and the 30-year was at 4.47% (unch) at 4 p.m.
The S&P Global Market Intelligence municipal curve was bumped up to one basis point: The one-year was at 2.82% (-1) in 2025 and 2.80% (-1) in 2026. The five-year was at 2.85% (-1), the 10-year was at 3.32% (-1) and the 30-year yield was at 4.52% (unch) at 4 p.m.
Bloomberg BVAL was narrowly mixed: 2.77% (-1) in 2025 and 2.78% (-1) in 2026. The five-year at 2.87% (-1), the 10-year at 3.31% (-1) and the 30-year at 4.49% (+1) at 4 p.m.
Treasury yields rose slightly.
The two-year UST was yielding 3.991% (+1), the three-year was at 3.96% (+3), the five-year at 4.064% (+3), the 10-year at 4.478% (+3), the 20-year at 4.994% (+3) and the 30-year at 4.973% (+2) near the close.
Primary to come
The Dormitory Authority of the State of New York (Aa2/AA-//) is on the day-to-day calendar with $1.205 billion of tax-exempt New York University revenue refunding bonds, Series A, serials 2026-2048, terms 2050, 2055. Wells Fargo.
DASNY is also on the day-to-day calendar with $920.65 million of taxable NYU revenue bonds, Series B. RBC Capital Markets.
The
The authority is also set to price Thursday $750 million of turnpike revenue bonds, Series 2025 A, serials 2043-2045, terms 2050, 2055. Barclays.
The authority will also price $50 million of forward-delivery turnpike revenue bonds, Series 2025 C, serials 2031-2035. Jefferies.
The Omaha Public Power District, Nebraska, (Aa2/AA//) is set to price Thursday $503.23 million of electric system revenue bonds, 2025 Series A, serials 2030-2045, terms 2050, 2055. Goldman Sachs.
The South Dakota Housing Development Authority is set to price Thursday $199 million of homeownership mortgage bonds, consisting of $125 million of non-AMT 2025 Series C bonds, serials 2036-2037, terms 2040, 2045, 2052, 2056; and $74 million of taxable 2025 Series D bonds, serials 2026-2037, terms 2040, 2045, 2051, 2055. Wells Fargo.
The National Finance Authority is set to price Thursday $162.615 million of social affordable housing certificates, consisting of $138.51 million of Series 2025-1 Class A-1 bonds (/AA-//), serial 2041; and $24.105 million of Series 2025-1 Class A-2 bonds (/BBB+//), serial 2041. Wells Fargo.
The California Housing Finance Agency (Aa2/AA//) is set to price Thursday $157.04 million of non-AMT sustainability affordable housing revenue bonds, 2025 Series A. Morgan Stanley.
The Public Finance Authority is set to price Thursday $132.35 million of ISF-Potomac Senior Living senior living revenue bonds, consisting of $128.39 million of Series A and $3.96 million of Series B. HJ Sims.
