Primary bond market

"With the initial announcement proving to be more aggressive than expected, the market responded overwhelmingly negatively," said Principal Asset's Seema Shah.

Parity Plus gives muni issuers increased transparency and resources to determine market demand prior to a bond sale.

Details surrounding the tariffs — which could be anything from reciprocal tariffs to finally implementing delayed tariffs on Canada and Mexico and on pharmaceuticals — have remained unclear, but uncertainty has plagued the market for weeks.

Triple-A yields have fallen as much as 12 basis points over the past three trading sessions.

New York Power Authority CFO Adam Barsky and Battery Park City Authority CFO Pamela Frederick join The Bond Buyer's Lynne Funk to unpack the far-reaching consequences of eliminating, reducing, or limiting the federal tax exemption for municipal bonds.

The asset class extended its selloff last week as concerns regarding the tax-exempt status of munis continued to mount, combined with a heavy new-issue calendar and tax season selling by investors, said Jason Wong, vice president of municipals at AmeriVet Securities.

The Maine Turnpike Authority is navigating a rocky road back to the market. 

Notable deals include a $600 million refunding deal by the New York City Municipal Water Authority and almost $400 million from Rochester, Minnesota.

"It seems like hitting last year's volumes should be within the strike zone for the marketplace," said Kyle Javes, a managing director and head of municipal fixed income at Piper Sandler.

Issuance for the week of March 31 is at $9.29 billion, with $8.011 billion of negotiated deals and $1.28 billion of competitive deals on tap.

California plans to price $2.5 billion in new money and refunding general obligation bonds next week, with retail orders Tuesday and final pricing Wednesday.

Following Wednesday's selloff, muni yields were cut even further, with yields rising up to six basis points, depending on the scale. Meanwhile, UST yields rose two basis points out long.

"We're navigating a crosscurrent of macro risks — tariffs, tax policy proposals, DOGE cuts, and evolving economic data — layered on top of a broader risk-off tone," said James Pruskowski, CIO of 16Rock Asset Management.

What's happening to the muni market is the "confluence of modest selling (via fund outflows and retail perhaps pausing during tax season); a heavy new issue calendar; and very thin near-term reinvestment expectations," said Matt Fabian, a partner at Municipal Market Analytics.

Another big deal from a major borrower is moving forward after Rochester's City Council last week approved a conduit bond sale for the Mayo Clinic.

Lighter supply, at an estimated $7.9 billion, and still-attractive valuations should allow for solid muni performance this week, said J.P. Morgan strategists.

An Oklahoma agency is borrowing $1.15 billion through an unrated tax-exempt Public Finance Authority bond deal to build and equip a tire factory backed by Finnish interests.

Municipal bond issuance for the week of March 24 is at $7.923 billion, with $6.673 billion of negotiated deals and $1.251 billion of competitive deals on tap.

Separately managed accounts have exploded in the muni market in recent years but high-yield SMAs remain rare.

Most of Thursday's issuance came from competitive deals, the largest being the Dormitory Authority of the State of New York with $2 billion-plus and California with $889 billion.