Municipals were weaker Monday but outperformed a U.S. Treasury selloff after lax demand for a Treasury auction sent yields higher. Equities ended down.
Muni yields were cut up to five basis points, while UST yields rose three to 12 basis points, pushing the 10-year UST above 4.5% and the 30-year above 5%.
Wednesday saw generally "very soft trading, not a lot of depth to the market; some of that's interest rates rising in a holiday weekend, and everybody tends to pack up and go home early," said Troy Willis, co-head of municipals and a senior portfolio manager at Easterly ROC Municipals.
"If you look at the sovereign debt markets, it looks Japan has had a couple lackluster auctions, and then U.S. Treasuries it kind of seemed like lighter demand on some new typical auctions that these Treasuries do on a regular basis," said Charlie Pulire, co-head of municipals and a senior portfolio manager at Easterly ROC.
"Light demand" for Wednesday's $16 billion 20-year bond auction "propelled yields to the nosebleeds and equities to the basement," said José Torres, senior economist at Interactive Brokers.
Munis are usually "fairly insulated" from it being so technically driven, but "if we're going to see a cycle where sovereign debt yields are rising in two of the largest economies, we might see some action in the muni market in sympathy that coincides with the shortened holiday week," Pulire said.
The two-year ratio Wednesday was at 71%, the five-year at 70%, the 10-year at 73% and the 30-year at 88%, according to Municipal Market Data's 3 p.m. ET read. ICE Data Services had the two-year at 71%, the five-year at 72%, the 10-year at 74% and the 30-year at 90% at 4 p.m.
Muni-UST ratios are less rich than they were throughout last year, specifically in the belly of the curve where there's more "high-grade SMA capital that is managed there," Pulire said.
Retail investors were "spooked" a little bit about the headlines on the potential loss of the tax exemption, budget, the economy and tariffs, he said, which typically drives retail investors to either work down or liquidate their muni exposures, he said.
That tends to be high-grade in the belly of the curve.
A year ago, ratios in that area were "quite rich" at 50% to 55%. Since then, ratios have moved "above trend" to mid-70%, according to Pulire.
"On the long end, where you see more institutional assets, that's around that 90% to 95%," compared to several weeks ago when long-end ratios were close to 100%, he said.
"So technicals, from that standpoint, seem to reflect what we're not in a heavy flow cycle. We're not watching a lot of money come in or out; it seems to be spotty," Pulire said.
Recent fund flows have not been enough to move the needle or make any big changes, Willis said.
The Investment Company Institute Wednesday reported $1.092 billion of inflows for the week ending May 14, following $787 million of inflows the previous week.
Exchange-traded funds saw inflows of $450 million after $680 million of inflows the week prior, per ICI data.
Investment grade is seeing larger fund flows than high yield, but in terms of duration, it's spread out a bit, Willis said.
"The money tends to be a little more concentrated, and right now it's a little more dispersed," he said.
In the primary market Wednesday, .P. Morgan priced and repriced for the Kansas Department of Transportation (Aa2/AA//) $730.726 million highway revenue and refunding bonds, Series 2025A, with 5s of 9/2026 at 2.99%, 5s of 2030 at 3.07%, 5s of 2035 at 3.48%, 5s of 2040 at 4.07% and 5s of 2045 at 4.42%, callable 9/1/2035.
Raymond James priced for Boston (Aaa/AAA//) $464.17 million of Series A GOs, with 5s of 2/2026 at 2.82%, 5s of 2030 at 2.90%, 5s of 2035 at 3.28%, 5s of 2040 at 3.82% and 5s of 2045 at 4.28%, callable 8/1/2033.
Raymond James priced for Williamson County, Texas, (/AAA/AAA/) a $295.4 million deal. The first tranche, $140.695 million unlimited tax road bonds, saw 5s of 2/2026 at 3.02%, 5s of 2030 at 3.13%, 5s of 2035 at 3.53%, 5s of 2040 at 4.08% and 5s of 2045 at 4.532%, callable 2/15/2035.
The second tranche, $66.13 million limited tax refunding and park bonds, saw 5s of 2/2026 at 3.02%, 5s of 2030 at 3.14%, 5s of 2035 at 3.54%, 5s of 2040 at 4.09% and 5s of 2045 at 4.53%, callable 2/15/2035.
The third tranche, $88.575 million limited tax notes, saw 5s of 2/2026 at 3.02%, 5s of 2030 at 3.14% and 5s of 2032 at 3.26%.
BofA Securities priced for Charlotte, North Carolina, (Aa3//AA-/) $292.385 million airport revenue bonds. The first tranche, $267.12 million of non-AMT bonds, Series 2025A, saw 5s of 7/2026 at 2.95%, 5s of 2030 at 3.07%, 5s of 2035 at 3.52%, 5s of 2040 at 4.07%, 5s of 2045 at 4.55%, 5.25s of 2050 at 4.72% and 5s of 2050 at 4.76%, callable 7/1/2035.
The second tranche, $25.265 million of AMT bonds, Series 2025B, saw 5s of 7/2027 at 3.54%, 5s of 2030 at 3.75%, 5s of 2035 at 4.17%, 5.25s of 2040 at 4.58% and 5.25s of 2045 at 4.90%, callable 7/1/2035.
Cabrera Capital Markets preliminarily priced for the Fort Bend County, Texas, (A2/AA/A+/) $262.03 million Assured Guaranty-insured senior lien toll road revenue and refunding bonds, with 5s of 3/2026 at 3.10%, 5s of 2030 at 3.26%, 5s of 2035 at 3.70%, 5s of 2040 at 4.26%, 5s of 2045 at 4.73%, 5.25s of 2050 at 4.88% and 5.25s of 2055 at 4.97%, callable 3/1/2035.
In the competitive market, the South Dakota Conservancy District (Aaa/AAA//) sold $198.24 million SRF program bonds, Series 2025A, to BofA Securities, with 5s of 8/2026 at 2.94%, 5s of 2030 at 3.00%, 5s of 2035 at 3.43%, 5s of 2040 at 4.00%, 5s of 2045 at 4.48%, 5s of 2050 at 4.66% and 5s of 2055 at 4.75%, callable 8/1/2035.
Chattanooga, Tennessee, (Aa1//AA+/) sold $145.9 million electric system refunding revenue bonds to BofA Securities, with 5s of 9/2026 at 2.95%, 5s of 2030 at 3.05%, 5s of 2035 at 3.45% and 5s of 2040 at 4.00%, callable 9/1/2035.
Montgomery County, Pennsylvania, (Aaa///) sold $144.825 million GOs to J.P. Morgan with 5s of 3/2026 at 2.93%, 5s of 2030 at 2.96%, 5s of 2035 at 3.36%, 5s of 2040 at 3.93% and 5s of 2045 at 4.37%, callable 3/1/2033.
The Salt Lake City School District Board of Education, Utah, (Aaa//AAA/) sold $140.95 million GOs to BofA Securities, with 5s of 3/2026 at 2.91%, 5s of 2030 at 2.97%, 5s of 2035 at 3.38%, 4s of 2040 at 4.10% and 4.5s of 2045 at 4.53%, callable 3/1/2035.
CUSIP requests rise
The aggregate total of identifier requests for new municipal securities in April — including municipal bonds, long-term and short-term notes, and commercial paper — rose 24% versus March totals. On a year-over-year basis, overall municipal volumes were up 21.5% through the end of April.
California led state-level municipal request volume with a total of 133 new CUSIP requests in April, followed by Texas with 132 and New York with 83.
For municipal bond identifier requests specifically, there was an increase of 27.2% month-over-month and requests are up 22.9% year-over-year.
AAA scales
MMD's scale was cut up to five basis points: The one-year was at 2.85% (unch) and 2.86% (unch) in two years. The five-year was at 2.92% (unch), the 10-year at 3.34% (+5) and the 30-year at 4.50% (+3) at 3 p.m.
The ICE AAA yield curve was cut two to five basis points: 2.87% (+2) in 2026 and 2.82% (+2) in 2027. The five-year was at 2.95% (+3), the 10-year was at 3.32% (+4) and the 30-year was at 4.46% (+5) at 4 p.m.
The S&P Global Market Intelligence municipal curve was cut up to four basis points: The one-year was at 2.85% (unch) in 2025 and 2.86% (unch) in 2026. The five-year was at 2.92% (unch), the 10-year was at 3.33% (+3) and the 30-year yield was at 4.50% (+4) at 4 p.m.
Bloomberg BVAL was cut one to four basis points: 2.84% (+1) in 2025 and 2.89% (+1) in 2026. The five-year at 2.99% (+1), the 10-year at 3.34% (+3) and the 30-year at 4.48% (+4) at 4 p.m.
Treasury yields sold off out long.
The two-year UST was yielding 4.001% (+3), the three-year was at 3.995% (+5), the five-year at 4.144% (+7), the 10-year at 4.584% (+10), the 20-year at 5.111% (+12) and the 30-year at 5.08% (+11) at the close.
Primary to come
The Rhode Island Health And Educational Building Corp. (/BB-//) is set to price Thursday $143.285 million CharterCARE Health of Rhode Island Obligated Group hospital financing revenue bonds, consisting of $87.05 million Series 2025A tax-exempts, terms 2040, 2045, 2050, 2055, and $56.235 million Series 2025B taxable, serial 2035. Barclays.
Lakeland, Florida, (Aa2//AA+/) is set to price $112.355 million capital improvement revenue and revenue refunding bonds, consisting of $74.47 million Series 2025A non-AMT refunding bonds, serials 2025-2045; $12.735 million Series 2025B AMT refunding bonds, serials 2026-2045; $25.15 million Series 2025C taxables, serials 2026-2045. Wells Fargo.
Competitive
The North Texas Municipal Water District is set to sell $204.175 million Panther Creek Regional Wastewater System contract revenue bonds at 11 a.m. Thursday.
