Municipals steady as asset class ekes out positive returns YTD

Municipals were steady Monday with small bumps on the front-end, while U.S. Treasuries were little changed and equities ended down.

The two-year muni-UST ratio Thursday was at 60%, the five-year at 63%, the 10-year at 75% and the 30-year at 95%, according to Municipal Market Data’s 3 p.m. ET read. ICE Data Services had the two-year at 59%, the five-year at 63%, the 10-year at 74% and the 30-year at 94% at a 4 p.m. read.

Muni yields fell last week, as the asset class showed strength “despite a nearly $20 billion new issue calendar, one of the largest on record, said Birch Creek strategists.

Despite this, “demand [has] remained supportive with investors adding $1.7 billion to the market last week,” said Daryl Clements, a municipal portfolio manager at AllianceBernstein.

The inflows mark the third straight week of addition to funds, following $937.3 million the week prior, with $1.43 billion going into investment-grade funds and $224 million into high-yield funds.

Returns for the month currently stand at 0.64%, which have “pushed muni returns back into the green with year-to-date returns of 0.09%,” said Jason Wong, vice president of municipals at AmeriVet Securities.

Following negative returns in July, munis turned positive “while supply will start to dwindle in the next couple of weeks as we head into September and the Labor Day holiday,” Wong said.

New-issue volume for this week is estimated at $10.7 billion, led by $1.1 billion of consolidated bonds from the Port Authority of New York and New Jersey.

August still has around $10 billion remaining in principal redemption demand, which should continue to outweigh supply for the month, Wong said.

Bids wanteds surged 22% last week, said Birch Creek strategists, noting the largest increases came in lower-rated bonds.

High-grade new issues generally did well, with “some select names and spots struggling, but overall balances were manageable enough for dealers to work out of,” they said.

A $950 million New York City GO deal saw strong demand in “the retail order period in shorter maturities and in the institutional order period where the longest 28-year tranche was bumped 5 bps to 4.95%,” Birch Creek said.

Many participants appeared surprised by the muni market’s resiliency and are “cautiously optimistic that the tone will begin to improve as the primary calendar eases up and the Fed[eral Reserve] gets closer to a rate-cutting cycle,” they said.

In the high-yield market, dealers noted “the selling was more opportunistic than a necessity, with accounts looking to monetize still-tight spreads amidst economic uncertainty and investor uneasiness over poor HY fund performance and notable markdowns,” Birch Creek strategists said.

The focus appeared to center around the front end of the curve with “especially strong inquiries across multiple sectors and buyers for short yield paper,” while generic credits weakened out long, according to Birch Creek.

AAA scales
MMD’s scale was little changed: The one-year was at 2.23% (-2) and 2.25% (-2) in two years. The five-year was at 2.41% (unch), the 10-year at 3.21% (unch) and the 30-year at 4.58% (unch) at 3 p.m.

The ICE AAA yield curve was bumped up to two basis points: 2.25% (-2) in 2026 and 2.22% (-1) in 2027. The five-year was at 2.41% (-1), the 10-year was at 3.15% (-1) and the 30-year was at 4.56% (unch) at 4 p.m.

The S&P Global Market Intelligence municipal curve was little changed: The one-year was at 2.23% (-3) in 2025 and 2.25% (-3) in 2026. The five-year was at 2.41% (unch), the 10-year was at 3.21% (unch) and the 30-year yield was at 4.58% (unch) at 4 p.m.

Bloomberg BVAL was little changed: 2.23% (-1) in 2025 and 2.24% (-1) in 2026. The five-year at 2.39% (-1), the 10-year at 3.15% (unch) and the 30-year at 4.55% (unch) at 4 p.m.

Treasuries were little changed.

The two-year UST was yielding 3.761% (flat), the three-year was at 3.726% (-1), the five-year at 3.825% (-1), the 10-year at 4.274% (-1), the 20-year at 4.82% (-1) and the 30-year at 4.843% (-1) near the close.

Primary to come
The Port Authority of New York and New Jersey (Aa3/AA-/AA-/) is set to price Wednesday $1.137 billion of consolidated bonds, consisting of $173.88 million of Series 249 and $963.53 million of Series 250. Ramirez.

The Long Island Power Authority (A2/A/A+/) is set to price Tuesday $750 million of electric system general revenue bonds, consisting of $500 million of Series 2025A and $250 million of Series 2025B. J.P. Morgan.

The New Hope Cultural Education Facilities Finance Corp. (Aa3/AA/AA-/) is set to price Wednesday $600 million of hospital revenue bonds (Children’s Health System of Texas), consisting of $500 million of Series 2025A and $100 million of Series 2025B. Goldman Sachs.

The National Finance Authority is set to price Tuesday $466.271 million of municipal certificates, consisting of $407.404 million of Series 2025-A-1 bonds (/AA-//), $52.455 million of Series 2025A-2 bonds (/BBB//) and $6.412 million of unrated subordinate Series 2025-B bonds. Jefferies.

The South Dakota Health and Educational Facilities Authority (/A+/AA-/) is set to price Wednesday $454.145 million of Sanford revenue bonds, consisting of $279.1 million of Series 2025B fixed rate bonds, $75 million of Series 2025C-1 tender bonds, $75 million of 2025C-2 tender bonds and $25 million of Series 2025E forward-delivery bonds. J.P. Morgan.

Philadelphia (A1//A+/) is set to price Thursday $369.02 million of airport revenue and refunding bonds, consisting of $107.845 million of non-AMT/governmental airport revenue bonds, Series 2025A, and $261.175 million of AMT/private activity airport revenue and refunding bonds, Series 2025B. Wells Fargo.

The Florida Local Government Finance Commission is set to price $333.455 million of non-rated senior living revenue bonds (Fleet Landing at Nocatee Project), consisting of $173.515 of Series 2025A, $16 million of Series 2025B1, $22.25 million of Series 2025B2, $115 million of Series 2025B3 and $6.69 million of Series 2025C. Ziegler.

Fort Bend County, Texas, (Aa1//AAA/) is set to price Thursday a $270.46 million deal, consisting of $100.99 million of Series 2025A, $45.565 million of Series 2025B, $28.665 million of Series 2025C and $95.24 million of Series 2025D. J.P. Morgan.

The Maryland Stadium Authority (/AA/AA/) is set to price Tuesday $261.78 million of taxable revenue bonds (Baseball Stadium Issue), consisting of $251.385 million of Series 2025B and $10.395 million of Series 2025C. Raymond James.

The Texas Department of Housing and Community Affairs (Aa1/AA+//) is set to price Wednesday $250 million of non-AMT residential mortgage revenue and refunding bonds, Series 2025D. Jefferies.

The New York City Health and Hospitals Corp (Aa3/A+/AA-/) is set to price Wednesday $247.015 million of health systems bonds, Series 2025A. BofA Securities.

The Delaware River Port Authority (A1/AA-//) is set to price Wednesday $227.055 million of revenue refunding bonds. Raymond James.

The New Jersey Housing and Mortgage Finance Agency (/AA-//) is set to price Tuesday $200 million of non-AMT social multi-family revenue bonds, consisting of $96.695 of Series 2024D-1 and $103.305 of Series 2024D-2. Barclays.

The Arlington Higher Education Finance Corp. (Ba2///) is set to price Wednesday $175.96 million of education revenue and refunding bonds (Basis Texas Charter Schools, Inc.). Morgan Stanley.

The Iowa Student Loan Liquidity Corp. (/AA//) is set to price Thursday $160.95 million of senior student loan revenue bonds, consisting of $100 million of taxable Series 2025A bonds and $60.95 million of AMT Series 2025B bonds. RBC Capital Markets.

Riverside, California, (Aa3/AA-//) is set to price Tuesday $140.635 million of refunding sewer revenue bonds, Series 2025A. BofA Securities.

The Regents of the University of Idaho (/AA//) are set to price Thursday $137.78 million of general revenue bonds, Series 2025A. Wells Fargo.

The Mt. Hood Community College District, Oregon, (Aa2///) is set to price Wednesday $136.445 million of Oregon School Bond Guaranty Act-insured GOs. Piper Sandler.

The Alaska Railroad Corp. (/BBB-//) is set to price Thursday $124.22 million of AMT cruise port revenue bonds. BofA Securities.

The Grace Christian School National Finance Authority (/BBB-//) is set to price Wednesday $118.72 million of education revenue bonds (GRACE Christian School Project). Stifel Nicolaus.

The Board of Trustees of the Metropolitan State University of Denver (Aa2/AA//) is set to price Tuesday $110.785 million of Colorado State Intercept Program-insured institutional enterprise revenue bonds (Student Housing and Event Center Project), consisting of $101.16 million of Series 2025A bonds and $9.625 million of taxable Series 2025B bonds. BofA Securities.

Competitive
The Miami-Dade County School District, Florida, is set to sell $450 million of tax anticipation notes at 11 a.m. Eastern Wednesday.

DeKalb County, Georgia, (Aa3//AA-/) is set to sell $435.22 million of water and sewerage revenue bonds (Second Resolution), Series 2025A, at 10 a.m. Tuesday. 

Wisconsin (Aa1/AA+//) is set to sell $267.08 million of GOs, Series 2025B, at 10:45 a.m. Tuesday.

Oyster Bay, New York, is set to sell $242.445 million of bond anticipation notes at 11 a.m. on Tuesday.

The Anderson School District No. 4, South Carolina, (Aa1/AA//) is set to sell $115 million of GOs (South Carolina School District Enhancement Program) at 11 a.m. Wednesday.