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"The equity market is looking at this more positively, but bonds are still thinking, 'Well, these tariffs still have to be resolved,'" said Kim Olsan, a senior fixed income portfolio manager at NewSquare Capital.

The top 25 state and local pension funds alone have seen the value of their public equities investments drop by a total of nearly a quarter of a trillion dollars in 2025, with roughly $169 billion of those losses coming during the four trading days that followed the Trump administration's April 2 announcement on global tariffs, a think tank said Wednesday.

Stocks surged moments after Trump's announcement of the 90-day pause for most countries on high tariffs he announced last week that have roiled markets.

Municipal AAA yield curves were cut up to another 42 basis points, depending on the curve, as of noon, pushing yields to multi-year highs and long-end muni to UST ratios above 100%. Muni yields have risen up to nearly 100 basis points in spots since the bond market rout began.

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.