Primary bond market

The competitive bond sale comes after the triple-A-rated city received a negative outlook from S&P over the use of reserves to ease budget pressures.

The state transportation commission expects to tap into $1.5 billion of revenue bond authorization with two deals totaling $350 million this year.

This week's expected elevated $12.6 billion in supply" "coincides with a recent uptick in secondary offerings … and may skim some froth from the market, particularly where spreads have hit one-year tights," said J.P. Morgan strategists led by Peter DeGroot.

The new-issue calendar is led by Washington with $1.3 billion of GOs selling by competitive bid in three series.

Piper Sandler will price $100 million of electric revenue bonds for Iowa public utility Muscatine Power and Water on Wednesday.

Munis enter this year with "strong credit fundamentals, elevated tax-equivalent yields, and a steeper curve that supports duration extension," said James Welch, municipal portfolio manager at Principal Asset Management.

Proceeds will help finance late stages of construction of city hall.

Yields have seen "intermittent volatility from broader macro and geopolitical crosscurrents, keeping sentiment cautious despite relatively muted headline moves," said James Pruskowski, managing director at Hennion & Walsh.

While fixed-spread tenders may be a novelty for tax-exempt bonds, they have been around for over 40 years for corporate bonds.

Supply should be "well-received, given strong inflows and the increase in reinvestment capital for the new month," said Chris Brigati, managing director and CIO at SWBC, and Ryan Riffe, senior vice president of capital markets at the firm.

The market is well-positioned for February, after January's near-record tax-exempt supply, said J.P. Morgan strategists led by Peter DeGroot.

Issuance was $34.308 billion in 471 issues, down 7.2% year-over-year from $36.982 billion across 536 transactions in 2025. However, this was the third-highest monthly figure for January and above the month's 10-year average of $29.699 billion

Munis were largely unchanged this week and tax-exempts continue to be "quite unattractive" at current levels, said Barclays strategists led by Mikhail Foux.

Wells Fargo Securities will price for the Chicago Transit Authority $575 million of first and second lien sales tax receipts bonds on Thursday, Feb. 5.

The District of Columbia deals will bring a mix of new money and refunding bonds with a variable-rate component.

Over the past five years, January has seen a relatively stable market tone, said Jeff Timlin, managing partner and head of municipal bond investing at Sage Advisory.

"Markets are reading this as a strategic pause, not a policy shift," said Gina Bolvin, president of Bolvin Wealth Management Group.

The muni market has rebounded from the technical pressures of the first half of last year — a result of surging issuance — said John Miller, head and CIO of First Eagle's municipal credit team.

The city's Department of Water and Power, which saw spreads widen after last year's deadly wildfires, upsized a revenue bond deal amid strong investor interest.

The top two municipal bond insurers wrapped over $41.828 billion in 2025, up from $41.166 billion in 2024, data shows.