Munis quiet to end October, issuance set to rebound

Munis were steady Friday ahead of a larger new-issue calendar, as U.S. Treasuries were little changed and equities ended up.

The two-year muni-UST ratio Friday was at 68%, the five-year at 64%, the 10-year at 67% and the 30-year at 89%, according to Municipal Market Data’s 3 p.m. EDT read. ICE Data Services had the two-year at 68%, the five-year at 64%, the 10-year at 67% and the 30-year at 88% at a 4 p.m. read.

This is “shaping up to be the best October since 1995” in the muni market, according to J.P. Morgan strategists led by Peter DeGroot, as it has “handily outperformed” USTs since Wednesday’s Federal Reserve meeting as well as for the entire month. They also remain fairly optimistic about the rest of the year.

“This year’s strong fall market narrative has centered on lower absolute rates and higher inflows, with $18 billion entering municipal funds since August,” they said. However, this “outperformance puts us at less compelling relative value entering the yearend performance campaign.”

The November 3 week’s calendar is “substantial” — an estimated $13.1 billion — although that is expected to be met with “solid” first-half November reinvestment capital of $19 billion, J.P. Morgan strategists said.

Looking at the rest of 2025, the bank analysts expect “rates and flows will continue to outweigh technicals in the long end, to both the up and downside of market performance … We also note that our economists continue to call for a December rate cut, which suggests a more optimistic path for rates in the shorter portion of the curve than currently suggested by fed funds futures trading.”

While Treasury yields sold off slightly across the curve this week — following Fed Chair Jerome Powell’s “mildly hawkish” comments after the Fed lowered its short-term interest rate target by another 25 basis points Wednesday — muni yields were little changed, pushing MMD-UST ratios lower across the curve, Barclays strategists led by Mikhail Foux said.

“The 10-year part of the curve has done well over the past several weeks, with levels last seen in early February,” the firm said. “At the moment, five-year and 10-year ratios are just three [percentage points] apart and front-end ratios are even higher.”

In general, Barclays said, “shorter-dated bonds have been clear underperformers since mid-September — the one-to-three-year bucket of the investment grade index has lost 30-45 bps over this period — while yields on longer-dated bonds have actually declined, flattening the yield curve.

The one-to-two-year segment of the index curve has partially underperformed due to problems related to tax-exempt money markets, which have seen persistent outflows over the past two weeks, on the order of $3 billion-plus.”

In particular, dealer VRDN inventories “have reached nearly $10 billion, the highest level in about six months,” the firm said. “This money market weakness has spilled into the short end of the muni IG index, with AAA ratios adjusting upwards more than 10 bps in the past several weeks.”

However, the Barclays analysts see this as “an opportunity, as higher VRDB resets should improve fund flows, while November coupons and redemptions should provide additional support.”

New-issue calendar
The new-issue calendar is at $13.118 billion, with $10.193 billion negotiated deals on tap and $2.925 billion of competitives.

The Southeast Energy Authority leads the negotiated calendar with $2.699 billion of energy supply revenue bonds.

The competitive calendar is led by Washington with $766.88 million of GOs in two series.

AAA scales
MMD’s scale was unchanged: 2.56% in 2026 and 2.46% in 2027. The five-year was 2.38%, the 10-year was 2.73% and the 30-year was 4.15% at 3 p.m.

The ICE AAA yield curve was little changed: 2.56% (+1) in 2026 and 2.47% (unch) in 2027. The five-year was at 2.41% (-1), the 10-year was at 2.76% (unch) and the 30-year was at 4.10% (unch) at 4 p.m.

The S&P Global Market Intelligence municipal curve was unchanged: The one-year was at 2.55% in 2025 and 2.46% in 2026. The five-year was at 2.38%, the 10-year was at 2.73% and the 30-year yield was at 4.12% at 3 p.m.

Bloomberg BVAL was unchanged: 2.52% in 2025 and 2.47% in 2026. The five-year at 2.37%, the 10-year at 2.72% and the 30-year at 4.06% at 4 p.m.

Treasuries were little changed.

The two-year UST was yielding 3.599% (-1), the three-year was at 3.602% (-1), the five-year at 3.711% (-1), the 10-year at 4.094% (-1), the 20-year at 4.642% (+1) and the 30-year at 4.666% (+1) near the close.

Primary to come
The Southeast Energy Authority (Aa3///) is set to price Monday $2.699 billion of energy supply revenue bonds, Series 2025E. J.P. Morgan.

The Los Angeles Department of Water and Power (Aa2//AA-/AA/) is set to price Thursday $977.65 million of water system revenue refunding bonds, Series 2025C. RBC Capital Markets.

Ohio (Aaa/AAA/AAA/) is set to price Wednesday $510.635 million of GOs, consisting of $294.195 million of Series C, $171.51 million of Series D and $44.93 million of Series A. Morgan Stanley.

Austin (Aa3/AA-/AA-/) is set to price Tuesday $418.81 million of electric utility system revenue refunding bonds. Morgan Stanley. The city (A1/A+//AA-/)is also set to price Thursday $224.115 million of AMT airport system revenue refunding bonds, Siebert Williams Shank.

The Lee County School Board (Aa3//AA-/) is set to price Tuesday $392.63 million of certificates of participation, consisting of $330.24 million of Series A and $62.39 million of Series B. BofA Securities.

The Illinois Finance Authority (A1/A+/AA-/) is set to price Tuesday $389.995 million of Rush University System for health revenue bonds. BofA Securities.

North Carolina (Aaa/AAA/AAA/) is set to price Wednesday $327.95 million of GO refunding bonds, consisting of $147.885 million of Series 2025C bonds and $180.065 million of Series 2026A forward delivery bonds. BofA Securities.

Chicago (/A+/A+/A+/) is set to price Tuesday $327.51 million of Chicago O’Hare International Airport general airport senior lien revenue bonds, consisting of $207.19 million of Series 2025A AMT bonds and $129.32 million of Series 2025B non-AMT bonds. Cabrera Capital Markets.

The Greater Orlando Aviation Authority (/BB+//) is set to price Tuesday $257.7 million of special purpose airport facilities revenue bonds (United Airlines Project), Series 2025. J.P. Morgan.

The Waste Pro USA Project is set to price $200 million of nonrated solid waste disposal revenue bonds through the Florida Development Finance Corp., the Mississippi Business Finance Corp. and the Louisiana Public Facilities Authority. Barclays.

Maryland Community Development Administration (Aa1//AA+/) is set to price Tuesday $180 million of taxable social residential revenue bonds, 2025 Series H. RBC Capital Markets.

The Fort Collins-Loveland Water District, Colorado, (/AA+//) is set to price Tuesday $161.32 million of water enterprise revenue bonds. Stifel Nicolaus.

The Huntsville Health Care Authority (A1///) is set to price Tuesday $160 million of Series 2025B bonds. BofA Securities.

The Colton Joint Unified School District, California, (Aa3/AA//) is set to price Tuesday $151.07 million of BAM-insured election of 2024 GO bonds, Series A, consisting of $106.91 million of capital indexed bonds and $44.16 million of capital appreciation bonds. Stifel Nicolaus.

Irvine, California, (/AA//) is set to price Wednesday $131.37 million of Community Facilities District No. 2013-3 (Great Park) Improvement Area No. 11 special tax bonds, 2025, insured by Assured Guaranty, consisting of $127.825 million of capital indexed bonds and $3.55 million of capital appreciation bonds. Stifel Nicolaus.

The New York State Housing Finance Agency (Aa2///) is set to price Thursday $115.51 million of sustainability affordable housing revenue bonds, 2025 Series E. J.P. Morgan.

The Missouri Development Finance Board is set to price Wednesday $100.315 million of nonrated tax-exempt tax increment and special district revenue bonds (Lakeport Village Project), Series 2025A. Stifel Nicolaus.

The American Municipal Power (A1/A//) is set to price Tuesday $100.2 million of Greenup Hydroelectric Project revenue refunding bonds, Series 2025A. Wells Fargo.

Competitive
Washington (Aaa/AA+/AA+/) is set to sell $540.065 million of various purpose GO refunding bonds, Series R-2026A, at 10:15 a.m. Eastern on Wednesday; and $226.815 million of motor vehicle fuel tax and vehicle-related fees GO refunding bonds, Series R-2026B, at 10:45 a.m. Wednesday.

The Illinois State Toll Highway Authority (Aa3/AA-/AA-/) is set to sell $500 million of toll highway senior revenue bonds, Series 2025A, at 10:15 a.m. Tuesday.

King County, Washington, (Aa1/AA+//) is set to sell $267.52 million of sewer revenue and refunding bonds, Series 2025A, at 10:45 a.m. Thursday.

The Charleston County School District, South Carolina, (/AA+//) is set to sell $135.57 million of GOs, Series 2025B (South Carolina School District Enhancement Program), at 11 a.m. Tuesday.

Hennepin County, Minnesota, (//AAA/) is set to sell $135.57 million of GOs, Series 2025A, at 10:45 Tuesday.

Jessica Lerner and Christina Baker contributed to this report.