Primary bond market

Munis were steady Monday following the large cuts the asset class saw last week, specifically on Tuesday, Jan. 20.

Munis were the best-performing U.S. fixed-income asset class through the first three weeks of January, but the strong performance has created some problems, Barclays strategists said.

It could signal the issuer did not get the best price during a negotiated deal, officials said.

This would be the state's first bond issuance since 2023.

"Of all these headlines, there's no direct concern for the muni market or municipal issuers. It's just tangential concerns of what this does for the economy and rates," said Brad Libby, fixed income credit analyst at Wellington Management and a fixed income portfolio manager with Hartford Funds.

Current events and financial developments outside of the muni sector mean that investors should hold off buying munis until rates correct, said Matt Fabian, president of Municipal Market Analytics.

The rates market is "on edge" as global fiscal and geopolitical pressures collide, said James Pruskowski, managing director at Hennion & Walsh.

The new-issue calendar is an estimated $10.836 billion, with $6.979 billion of negotiated deals on tap and $3.857 billion of competitives.

"We're starting off from a really high tax equivalent yield and that really starts the market from a position of strength," said Matt Norton, CIO for municipal bonds at AllianceBernstein.

January got off to a good start, with muni yields rallying through Jan. 7. Since then, yields have been steady to slightly richer in spots, with muni yields seeing some strength in the front end and belly of the curve.

"The bond market breathed a sigh of relief this morning as the CPI inflation numbers came in a tad weaker than expected," said John Kerschner, global head of securitised products and portfolio manager at Janus Henderson Investors.

The second-largest public school system in Texas could ask voters to approve as much as $6.24 billion of bond authorization as soon as in May.

Despite the quiet start to the week for munis, all financial markets may feel a "heightened level of risk for rate volatility over the next few days," said Tim Iltz, a fixed income credit and market analyst at HJ Sims.

"With decent job growth in December and a downtick in the federal funds rate, the Federal Reserve will likely hold the federal funds rate steady at [its] next decision in late January," said Comerica Bank Chief Economist Bill Adams.

Average trade size continued to decline in 2025, "consistent with a market that is becoming increasingly more electronic," the MSRB said.

Los Angeles plans to price $86 million in bonds off its Proposition HHH bond measure, closing out the $1.2 billion GO authorization from 2016.

Munis are off to a "hot start" this year, said Jeremy Holtz, a portfolio manager at Income Research + Management.

In this third of a three-part 2026 municipal bond outlook series, Market Intelligence analyst Jeff Lipton explains how another year of heavy supply, surging ETF and SMA assets, climate and cyber risk, and growing use of bond insurance will drive muni market structure and strategy for both sell-side and buy-side stakeholders.

The Nashville Metropolitan Airport Authority is issuing municipal bonds to finance upgrades to an airport bulging at the seams after rapid traffic growth.

Surprisingly, the expected surge in net supply last year did not elicit a major repricing in the muni market, said Pat Luby, head of municipal strategy at CreditSights.