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New York Mayor Eric Adams, bolstered by lower-than-forecast spending on migrants, proposed a $114.5 billion budget for the fiscal year that begins July 1.

New York boasts four of the top 10 issuers, followed by California with two and one a piece for Florida, Massachusetts, Washington and New Jersey.

The state will try to convince the rating agency to lift its debt to AA, to match the rating others have assigned.

Treasury Secretary nominee Scott Bessent sparred with the Senate Finance Committee over the future direction of fiscal policy in the Trump administration that will be trying to tackle major tax legislation.

The Fed may make more cuts and there's a floor forming under the Treasury market, per panelists at the Executives' Club of Chicago's Annual Economic Outlook.

Municipals are underperforming USTs month-to-date, with the Bloomberg Municipal Index showing losses of 1.02% versus 0.92% for USTs as of Tuesday, but both are outperforming losses in corporates that are seeing 1.23% losses in January.

S&P Global Ratings downgraded Chicago's general obligation debt to BBB from BBB-plus, saying the 2025 budget fails to address a structural imbalance.

"Even though it will be priced to sell, such large supply in one week may be a struggle for the asset class," said Anders S. Persson, Nuveen's chief investment officer for global fixed income, and Daniel J. Close, Nuveen's head of municipals.

The state comptroller forecasts a $23.8 billion budget balance at the start of fiscal 2026-27, down from a record $39.4 billion for fiscal 2024-25.

The muni market also faces an elevated new-issue calendar, which may put additional pressure on muni yields. Bond Buyer 30-day visible supply sits at $17.57 billion.