Tax

A $125 million bond sale by the Indianapolis Local Public Improvement Bond Bank for Indianapolis public transit operator IndyGo is on day-to-day status.

Weakness in the muni market has been partly amplified by ETF selling; high-grade yields rose more than 60 basis points on parts of the curve over two sessions.

"The changing momentum on what the market is looking for on tariffs and the volatility in the equity market is spilling over into the Treasury market, and munis can only fight the Treasury market for so long," said Pat Luby, head of municipal strategy at CreditSights.

"In the aftermath of this week's Treasury yield move lower, MMD-UST ratios have reached short-term highs," Barclays strategists said.

Squire Patton Boggs attorney Michael Cullers believes the 10th Amendment may pose an obstacle.

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

As the market absorbs the effects of the tariff rollout industry analysts are predicting a heavy dose of uncertainty in several key sectors of the municipal bond market.

At noon Thursday, muni yields had been bumped up to 12 basis points, depending on the curve, while UST yields rallied, with yields falling 13 basis points on the short-end.

The law cuts the individual income tax rate to 3% by calendar year 2030, with triggers that may drive future annual decreases until it ultimately falls to zero.

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.