Munis steady as new-issue calendar falls to $4.7B

Municipals were steady Friday ahead of a smaller new-issue calendar. U.S. Treasury yields rose slightly and equities ended mixed.

The two-year muni-UST ratio Friday was at 56%, the five-year at 60%, the 10-year at 71% and the 30-year at 90%, according to Municipal Market Data’s 3 p.m. ET read. ICE Data Services had the two-year at 56%, the five-year at 59%, the 10-year at 71% and the 30-year at 92% at a 4 p.m. read.

Munis and USTs have seen strong rallies this month. Tax-exempt munis, supported by USTs, are having a very good month as MMD yields are down 30 to 35 basis points out long, and both the investment-grade and high-yield indices are seeing gains of more than 2% month-to-date, Barclays strategists, led by Mikhail Foux, said.

“In September, duration seems to be the name of the game for our asset class: the long end is by far the best performing maturity bucket of the market, although for the year, return of the 22-year plus bonds remain in negative territory,” Barclays strategists said.

BofA strategists’ predictions for “a late year muni market rally” showed the first signs of coming to fruition, as the 10-year AAA MMD yield “more than removed the April cheapening following President Trump’s Liberation Day tariff announcements,” they said.

“This came slightly earlier than we thought, though investors who have followed our increasingly open speculation and strategy recommendations since late June are probably not surprised by this pleasant outcome,” they said.

“Declining muni/Treasury ratios during this month of weaker principal redemptions and coupon payments,” is a positive sign for the rest of the year, BofA strategists said, adding, this performance is a notable change from July’s and August’s “somewhat disappointing” results.

Strategists “remained reluctant to embrace the market’s blaming of large supply” on how ratios performed during those months, but now feel the true culprit was “not large supply, but rather that muni investors wanted some assurance that peak Treasury yields had been delivered,” they said.

Now that BofA’s “3% target for 10-year AAA bonds was attained,” strategists are setting their sights on the “2.50% to 2.60% area, followed by the 2.30% area,” for the bonds, BofA strategists said.

“The 2.50%-2.60% zone clearly has a high odds of being attained within the 2025 timeline; even the secondary target zone of 2.30% has a decent probability this year,” they said. “We believe by late October or early November, it should be clear whether the Fed has been right on the curve or somewhat behind.”

Changes in the larger macroeconomic landscape will invariably “change the Federal Reserve’s posture as well,” possibly leaving both “more supportive of municipal bond market performance moving forward,” BofA Strategists said.

New-issue calendar
Issuance for the week of Sept. 15 is at an estimated $4.738 billion, with $4.057 billion of negotiated deals and $681.5 million of competitive deals on tap, according to LSEG.

The Metropolitan Transportation Authority leads the negotiated calendar with $1.014 billion of green climate bond-certified transportation revenue refunding bonds.

The competitive calendar is led by Greenville County School District, Georgia, with $185.5 million of GOs.

AAA scales
MMD’s scale was unchanged: The one-year was at 2.12% and 2.00% in two years. The five-year was at 2.17%, the 10-year at 2.90% and the 30-year at 4.23% at 3 p.m.

The ICE AAA yield curve was unchanged: 2.06% in 2026 and 2.00% in 2027. The five-year was at 2.13%, the 10-year was at 2.87% and the 30-year was at 4.26% at 4 p.m.

The S&P Global Market Intelligence municipal curve was little changed: The one-year was at 2.11% (+1) in 2025 and 1.99% (+1) in 2026. The five-year was at 2.16% (+1), the 10-year was at 2.90% (unch) and the 30-year yield was at 4.23% (unch) at 4 p.m.

Bloomberg BVAL was unchanged: 2.04% in 2025 and 2.00% in 2026. The five-year at 2.11%, the 10-year at 2.86% and the 30-year at 4.20% at 4 p.m.

Treasuries saw small losses.

The two-year UST was yielding 3.557% (+1), the three-year was at 3.526% (+2), the five-year at 3.626% (+3), the 10-year at 4.06% (+4), the 20-year at 4.642% (+3) and the 30-year at 4.677% (+2) near the close.

Primary to come
The Metropolitan Transportation Authority (A2/A/AA/AA/) is set to price Tuesday $1.014 billion of green climate bond-certified transportation revenue refunding bonds, Series 2025B. Goldman Sachs.

Houston, Texas, (Aa3//AA/) is set to price Tuesday $289.21 million of public improvement refunding bonds. HilltopSecurities.

The Douglas County School District (Aa1/AA+//) is set to price Monday $274.64 million of Georgia State Aid Intercept Program-insured GOs. Raymond James.

The Louisiana Public Facilities Authority (A1//A/) is set to price Tuesday $211.24 million of Assured Guaranty-insured lease revenue bonds (South Quad L3C — Louisiana State University South Quad (Phase IV) Project). RBC Capital Markets.

The New York City Housing Development Corp. (Aa2///) is set to price Tuesday $198.76 million of taxable sustainable development housing impact bonds, Series 2025D. Jefferies.

The Richmond County Board of Education, Georgia, (Aa1/AA+//) is set to price Monday $198.205 million of Georgia State Aid Intercept Program-insured GO sales tax bonds. Raymond James.

The Idaho Housing and Finance Association (Aa1///) is set to price Monday $175 million of taxable single-family mortgage bonds, 2025 Series E. BofA Securities.

The Philadelphia Authority for Industrial Development (A1/A+/A+/) is set to price Tuesday $170.27 million of city service agreement revenue bonds, consisting of $128.79 million of Rebuild Project bonds, Series 2025A, and $41.48 million of Cultural and Commercial Corridors Program refunding bonds, Series 2025B. Ramirez.

Sarasota County, Florida, (/AA+/AA+/) is set to price Tuesday $146.71 million of utility system revenue bonds. BofA Securities.

Leander, Texas, (Aa1/AA//) is set to price Thursday $132.105 million of combination tax and revenue certificates of obligation. FHN Financial Capital Markets.

Laredo, Texas, (Aa2/AA//) is set to price Monday a $124.09 million deal, consisting of $31.7 million of combination tax and revenue certificates of obligation, $32.57 million of tax notes, $22.965 million of property finance contractual obligations and $46.125 million of forward-delivery GO refunding bonds.

Competitive
The Greenville County School District, Georgia, (MIG1/A-1+//) is set to sell $185.5 million of GOs (South Carolina School District Credit Enhancement Program), Series 2025C, at 11:30 a.m. Eastern Thursday.

The Clover School District No. 2, South Carolina, (MIG1///) is set to sell $156 million of GO bond anticipation notes at 11 a.m. Wednesday.

Tulsa, Oklahoma, is set to sell $107.705 million of GOs, Series 2025A, at noon Wednesday.

Jessica Lerner contributed to this story.