Secondary bond market

This week, "look for deals to get priced to attract demand," said Pat Luby, head of municipal strategy at CreditSights, and Wilson Lees, an analyst at the firm.

Many muni participants stayed on the sidelines to start last week due to "the sudden about-face in the Treasury market and uncertainty over how long-lasting the incursion would be," Birch Creek strategists said.

"We are still not overly concerned about the effect of the geopolitical concerns on municipals — in our view, the muni market is well insulated," said Barclays strategists.

Brightline asked S&P to withdraw its rating after the latest downgrade.

Market technicals should weaken this month in line with seasonal expectations, with estimated redemption capital of $32 billion compared to estimated supply of $41 billion, said Appleton Partners strategists.

With USTs stable and the "snoozer" of economic data Wednesday morning, the muni market has settled, with muni yields little, said Jeff MacDonald, EVP and head of fixed income strategies at Fiduciary Trust International.

"Once the damage is done, it takes a little longer for it to come back," said Elaine Brennan, executive director of the public finance department at Roosevelt and Cross, of the muni market.

First thing this morning, there wasn't much action as market participants waited to see what would happen, but as the day went on, munis got progressively weaker, said Kyle Gerberding, director of trading, a portfolio manager and partner at Asset Preservation Advisors.

On the week, the muni market performed well, with most investor action happening in the longer half of the curve, said BofA strategists.

The fund plans to liquidate remaining assets, although a class-action lawsuit may delay final distributions.

Investors added $1.029 billion to municipal bond mutual funds in the week ended Wednesday, following $1.269 billion of inflows the prior week, according to LSEG Lipper data. This is the seventh time in eight weeks that inflows have topped $1 billion.

There is a positive view of the muni market in the long-term due to a mix of attractive tax-adjusted yields and a generally favorable credit backdrop, said Cooper Howard, director of fixed income research and strategy at Charles Schwab.

While broader economic risks remain, market dynamics are being driven by supply, demand and income generation, rather than macro headlines, said Pat Haskell, head of the municipal bond group at BlackRock.

"Trump indicated the administration will implement additional tariffs under different authorities, and we expect the aggregate effective tariff rate to ultimately settle around 13%, largely unchanged from current levels," Nuveen strategists said.

Bond markets believed Trump would likely keep tariffs in place in some form — even before the president made his announcement later in the afternoon — which partly explains their muted response throughout the day.

This is the sixth time in seven weeks that inflows have topped $1 billion.

"For 2026, we expect municipal bonds to remain compelling as reinvestment demand stays strong and rate normalization progresses," said Brian Barney, municipal portfolio manager at Parametric.

Following this week, the pace of issuance should pick up, Birch Creek strategists said.

"Unsurprisingly, the market is taking these numbers in stride, with the bond market only slightly higher after a large rally over the last couple of days due to the equity market sell-off," said John Kerschner, global head of securitized products and portfolio manager at Janus Henderson Investors.

Currently, munis are largely operating "in their own world" — ignoring rich valuations and upcoming supply, said Kim Olsan, senior fixed income portfolio manager at NewSquare Capital, in a report.