Munis little changed ahead of FOMC decision

Municipals were little changed Tuesday as U.S. Treasury yields fell and equities ended down.

The two-year muni-UST ratio Monday was at 67%, the five-year at 69%, the 10-year at 75% and the 30-year at 93%, according to Municipal Market Data’s 3 p.m. ET read. ICE Data Services had the two-year at 65%, the five-year at 67%, the 10-year at 72% and the 30-year at 91% at 4 p.m.

The new-issue calendar is taking “a slight breather” this week with markets closed Thursday, said Chris Brigati, CIO and managing director of SWBC, and Ryan Riffe, SVP of capital markets at the firm.

New-issue supply is an estimated $6.1 billion, with a majority of the deals coming to market Tuesday.

“We believe municipals should continue to perform well given the lighter supply, positive fund flows, and attractive ratio levels,” Brigati and Riffe said. “In addition, June reinvestment capital continues to be put to work with another push from July redemptions just around the corner.”

Also contributing to the lighter calendar this week is the Federal Reserve meeting.

“We expect no change to rates but [for the Federal Open Market Committee] to continue to signal that rate cuts should still be expected,” said Cooper Howard, a fixed income strategist at Charles Schwab.

“[With] the labor market holding up OK and inflation not showing signs of spiking higher, the Fed can wait and see how the economy develops before making a move,” he said.

The lighter calendar may “provide an opportunity for dealers to clean up remaining positions,” said Anders S. Persson, Nuveen’s chief investment officer for global fixed income, and Daniel J. Close, Nuveen’s head of municipals.

“The market’s supply/demand dynamics remain balanced, bolstered by substantial reinvestment capital of approximately $140 billion available through Aug. 1,” they said.

Each of the past two weeks saw issuance of nearly $20 billion.

Last week’s “enormous new-issue calendar was well bought by a mix of retail and institutional investors” with “demand powered by strong summer reinvestment,” said Matt Fabian a partner at Municipal Market Analytics.

“While price changes happened to match up with the Treasury market last week — both municipals and taxables seeing modest gains led by the belly of the curve — the reasons for such differed, USTs benefitting from benign inflation data and a solid if not spectacular 30-year bond auction,” he said.

Also helping the tax-exempt market was a “surge of institutional interest, noting some persistence of customer buys at an average trade size of [$400,000 ], which is about as institutional as 2025 has been,” Fabian said.

With ratios still low/rich compared to recent peaks, he said “larger block buying will be less about banks/crossovers, more about funds; related data suggest fund skew still points toward ETFs, especially with last week’s data showing large net creations of VTEB.”

The growth of ETFs and SMAs remained parallel, with “SMAs still rapidly expanding presence noted last week in another five-day trade count above 350,000,” Fabian noted.

Worries about SMAs “slow digestion” of new issues appeared to have been “mooted” by “improvements in related distribution technology,” Fabian said.

“Instead, dealers’ willingness to keep bonds priced to move has done its work; last Wednesday saw a daily $9.49 billion of net customer buying: the biggest single day for such since Dec 2021,” he said.

In the primary market Tuesday, BofA Securities priced for the San Diego County Regional Airport Authority (Aa3/NR/AA-/) $788.975 million of senior airport revenue bonds. The first tranche, $156.495 million of Series 2025A governmental/non-AMT bonds, saw 5s of 7/2028 at 2.54%, 5s of 2030 at 2.58%, 5s of 2035 at 3.25%, 5s of 2040 at 3.97%, 5s of 2045 at 4.48%, 5.25s of 2050 at 4.62% and 5.25s of 2055 at 4.71%, callable 7/1/2035.

The second tranche, $632.48 million of Series 2025B private activity/AMT bonds, saw 5s of 7/2028 at 3.35%, 5s of 2030 at 3.52%, 5s of 2035 at 4.09%, 5.25s of 2040 at 4.59%, 5.25s of 2045 at 4.88%, 5.25s of 2050 at 5.01% and 5.5s of 2055 at 4.96%, callable 7/1/2035.

Siebert Williams Shank priced for the Great Lakes Water Authority $529.175 million of water supply system revenue and revenue refunding bonds. The first tranche, $255.165 million of Series A revenue refunding senior lien bonds (Aa3/AA-/A+/), saw 5s of 7/2027 at 2.73%, 5s of 2030 at 2.96%, 5s of 2035 at 3.62% and 5s of 2038 at 3.99%, callable 1/1/2035.

The second tranche, $54.545 million of Series B revenue refunding second lien bonds (A1/A+/A/), saw 5s of 7/2031 at 3.22% and 5s of 2034 at 3.58%, callable 1/1/2035.

The third tranche, $110.1 million of Series C revenue senior lien bonds (Aa3/AA-/A+/), saw 5s of 7/2027 at 2.73%, 5s of 2030 at 2.96%, 5s of 2035 at 3.62%, 5s of 2040 at 4.21%, 5.25s of 2045 at 4.65%, 5.25s of 2050 at 4.81% and 5.25s of 2055 at 4.86%, callable 1/1/2035.

The fourth tranche, $109.365 million of Series D revenue second lien bonds (A1/A+/A/), saw 5s of 7/2027 at 2.88%, 5s of 2030 at 3.09%, 5s of 2035 at 3.73%, 5s of 2040 at 4.32%, 5.25s of 2045 at 4.73%, 5.5s of 2050 at 4.82% and 5.5s of 2055 at 4.89%, callable 1/1/2035.

J.P. Morgan priced for Riverside County $450 million of non-rated 2025 tax and revenue anticipation notes, with 5s of 6/2026 at 2.69%, noncall.

BofA Securities Dormitory Authority of the State of New York (Aa3//A+/) $372.925 million of State University of New York dormitory facilities revenue bonds. The first tranche, $150.93 million of Series A sustainability bonds, saw 5s of 7/2026 at 2.77%, 5s of 2030 at 2.95%, 5s of 2035 at 3.59%, 5s of 2040 at 4.21%, 5s of 2045 at 4.67%, 5.25s of 2050 at 4.83% and 5.25s of 2055 at 4.90%, callable 7/1/2035.

The second tranche, $221.995 million of Series B bonds, saw 5s of 7/2026 at 2.77%, 5s of 2030 at 2.95%, 5s of 2035 at 3.59%, 5s of 2040 at 4.21%, callable 7/1/2035.

J.P. Morgan priced for the El Paso County Hospital District, Texas, (///AA+/) $268.255 million of Assured Guaranty-insured GOs, with 5s of 2/2026 at 3.08%, 5s of 2030 at 3.29%, 5s of 2035 at 3.92%, 5s of 2040 at 4.56%, 5.25s of 2045 at 4.95%, 5.5s of 2050 at 5.08% and 5.5s of 2055 at 5.15%.

Barclays priced for the New York State Housing Finance Agency (Aa2///) $169.32 million of multi-family affordable housing revenue bonds. The first tranche, $55.6 million of Series B-1, saw all bonds price at par: 3.375s of 11/2028, 3.55s of 5/2030, 3.6s of 11/2030, 4.25s of 5/2035, 4.3s of 11/2035, 4.75s of 11/2040, 5s of 11/2045, 5.1s of 11/2050, 5.15s of 11/2055 and 5.25s of 11/2065, callable 11/1/2030.

The second tranche, $113.72 million of Series B-2, saw 3.6s of 11/2064 with a mandatory tender of 5/1/2029 price at par, callable 5/1/2027.

Goldman Sachs priced for Tallahassee (Aa3/AA//) $108.8 million of energy system refunding revenue bonds, with 5s of 10/2026 at 2.70%, 5s of 2030 at 2.94%, 5s of 2035 at 3.53% and 5s of 2037 at 3.76%, callable 10/1/2035.

In the competitive market, New Mexico (Aa3/AA//) sold $235.1 million of severance tax bonds, Series 2025A, with 5s of 7/2026 at 2.71%, 5s of 2030 at 2.85% and 5s of 2035 at 3.51%, callable 7/1/2030. Barclays had the winning bid with a TIC of 3.6101%.

AAA scales
MMD’s scale was unchanged: The one-year was at 2.64% and 2.65% in two years. The five-year was at 2.75%, the 10-year at 3.32% and the 30-year at 4.54% at 3 p.m.

The ICE AAA yield curve was bumped up to two basis points: 2.69% (-1) in 2026 and 2.60% (-2) in 2027. The five-year was at 2.73% (-2), the 10-year was at 3.22% (-2) and the 30-year was at 4.50% (unch) at 4 p.m.

The S&P Global Market Intelligence municipal curve was little changed: The one-year was at 2.64% (-1) in 2025 and 2.64% (+1) in 2026. The five-year was at 2.74% (unch), the 10-year was at 3.32% (unch) and the 30-year yield was at 4.53% (unch) at 4 p.m.

Bloomberg BVAL was bumped a basis point: 2.65% (-1) in 2025 and 2.67% (-1) in 2026. The five-year at 2.77% (-1), the 10-year at 3.26% (-1) and the 30-year at 4.49% (-1) at 4 p.m.

Treasuries were firmer.

The two-year UST was yielding 3.951% (-2), the three-year was at 3.896% (-4), the five-year at 4.986% (-5), the 10-year at 4.388% (-6), the 20-year at 4.903% (-6) and the 30-year at 4.89% (-7) near the close.