Munis steady ahead of $6.6B new-issue calendar
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Munis were steady Monday ahead of a smaller new-issue calendar, as U.S. Treasury yields rose and equities ended down.
The two-year muni-UST ratio Monday was at 59%, the five-year at 63%, the 10-year at 76% and the 30-year at 94%, according to Municipal Market Data’s 3 p.m. ET read. ICE Data Services had the two-year at 60%, the five-year at 63%, the 10-year at 74% and the 30-year at 94% at a 4 p.m. read.
Municipal markets were relatively quiet last week, “as August vacations were in full effect and the primary calendar slowed,” said Birch Creek strategists.
Ahead of Friday, the AAA MMD scale was largely unchanged, while long-term muni yields were slightly weaker, they said.
On Friday, markets rallied following Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole Symposium, where he solidified a rate cut at the Fed’s September meeting, pushing muni yields one to four basis points lower, depending on the curve.
For the whole week, though, muni yields rose an average of 2.1 basis points across the curve, with 10-year notes rising by 3.4 basis points, said Jason Wong, vice president of municipals at AmeriVet Securities.
Supply slowed last week, with the new issue calendar falling to under $10 billion, roughly half of what the market saw in the prior weeks, said SWBC’s Chris Brigati and Ryan Riffe.
“This change in supply was met with a wave of more than $2 billion in inflows into municipal mutual funds,” they said.
Muni mutual funds saw inflows of $2.332 billion last week, following in the wake of $108 million in outflows the week prior, according to LSEG.
A majority (78%) of those inflows were driven by a single high-yield exchange-traded fund that “saw an asset allocation shift from equities into long-term municipal bonds,” said J.P. Morgan strategists, led by Peter DeGroot.
Munis are seeing gains of 0.61% month-to-date, leading to the asset class eking out gains of 0.06%, year-to-date.
“With just one week left in the month, coupled with a light calendar, secondary trading should be the main driver for rates this week, as most issuers will take a pause for the rest of the summer, returning after the Labor Day holiday,” Wong said. “This should give a slight boost to muni returns as investors look to take advantage of higher yields before the expected rate cuts in September.”
Bids wanteds volume “fell 5% relative to recent averages, while customer purchases dropped by 3%,” Birch Creek strategists said.
New issues in the investment-grade market saw mixed performance, they added. For instance, $1.4 billion New York City Transitional Finance Authority’s deal recorded “good retail demand with around $775mm in orders with spreads only adjusted slightly in both directions,” while others were left with balances, they said.
“We expect subdued activity again [this] week heading into the Labor Day holiday,” Birch Creek strategists said.
This week’s calendar is estimated at $6.639 billion, led by $1.775 billion of Illinois general obligation bonds, coming Tuesday in six competitive auctions.
A $929.77 million deal of green GOs from the San Francisco Bay Area Rapid Transit District leads the negotiated calendar.
“With one full week of August remaining, we head into September, which is historically one of the lightest months for municipal reinvestment capital,” said SWBC’s Brigati and Riffe. “If weekly supply continues to price below average levels ($10.6 billion) and inflows remain positive, we believe municipals will likely strengthen relative to Treasuries.”
AAA scales
MMD’s scale was unchanged: The one-year was at 2.17% and 2.19% in two years. The five-year was at 2.37%, the 10-year at 3.23% and the 30-year at 4.61% at 3 p.m.
The ICE AAA yield curve was unchanged: 2.23% in 2026 and 2.20% in 2027. The five-year was at 2.39%, the 10-year was at 3.16% and the 30-year was at 4.60% at 4 p.m.
The S&P Global Market Intelligence municipal curve was unchanged: The one-year was at 2.18% in 2025 and 2.20% in 2026. The five-year was at 2.36%, the 10-year was at 3.23% and the 30-year yield was at 4.60% at 4 p.m.
Bloomberg BVAL was unchanged: 2.18% in 2025 and 2.20% in 2026. The five-year at 2.36%, the 10-year at 3.20% and the 30-year at 4.60% at 4 p.m.
Treasuries saw losses.
The two-year UST was yielding 3.732% (+4), the three-year was at 3.679% (+3), the five-year at 3.791% (+3), the 10-year at 4.282% (+3), the 20-year at 4.865% (+2) and the 30-year at 4.895% (+2) near the close.
Primary to come
The
The Arizona Board of Regents (Aa2/AA//) is set to price Tuesday $301.905 million of Arizona State University System tax-exempt revenue bonds, Series 2025A. Morgan Stanley.
The Washington State Housing Finance Commission is set to price Tuesday $262.231 million of municipal certificates, Series 2025-1, consisting of $213.718 million of Class A-1 bonds (/AA-//), $41.301 million of Class A-2 bonds (/BBB+//) and $7.212 million of nonrated subordinate Class B bonds. BofA Securities.
The Anaheim Housing and Public Improvements Authority (/AA-/AA-/AA) is set to price Tuesday $210.6 million of electric utility distribution system revenue bonds, consisting of $97.97 million of Series 2025-A improvement bonds and $112.63 million of Series 2025-B refunding bonds. J.P. Morgan.
The Utah Housing Corp. (Aa2///) is set to price Tuesday $170 million of taxable single-family mortgage bonds, Series 2025I. BofA Securities.
The Rhode Island Health and Educational Building Corp. (/BB-//) is set to price Wednesday $141.36 million of hospital financing revenue bonds (Chartercare Health of Rhode Island Obligated Group), consisting of $127.86 million of Series 2025A bonds and $13.5 million of taxable Series 2025B bonds. Barclays.
The Michigan Finance Authority (/A-/A-/) is set to price Wednesday $131.225 million of local government loan program revenue refunding bonds (Public Lighting Authority Refunding Local Project), Series 2025A. Siebert Williams Shank.
The Saratoga County Capital Resource Corp. (/AA-//) is set to price Tuesday $110.17 million of tax-exempt lease revenue bonds (WSWHE BOCES Project). KeyBanc Capital Markets.
Competitive:
Illinois (A3/A-/A-/) is set to sell $240 million of taxable GOs, Series of September 2025A, at 10:15 a.m. Eastern Tuesday; $235 million of GOs, Series of September 2025B at 10:45 a.m. Tuesday; and $235 million of GOs, Series of September 2025C, at 11:15 a.m. Tuesday; $355 million of GOs, Series of September 2025D at 11:45 a.m. Eastern Tuesday; $355 million of GOs, Series of September 2025E, at 12:45 p.m. Tuesday; and $355 million of GOs, Series of September 2025F, at 12:45 p.m. Tuesday.
The South Carolina Association of Governmental Organizations is set to sell $306.945 million of certificates of participation, Series 2025B (South Carolina School District Credit Enhancement Program), at 11 a.m. Thursday.
North Hempstead is set to sell $142.701 million of bond anticipation notes at 10:30 a.m. Thursday.
The Berkeley County School District is set to sell $111 million of GOs, Series 2025A, at 10 a.m. on Tuesday.
The Santa Clara Valley Water District (Aa1//AA+/) is set to sell $110.275 million of water system refunding revenue bonds, Series 2025A, at 10:45 a.m. Tuesday.
