Markets quiet to end week but tone remains ‘strong’

Municipals were steady Friday as U.S. Treasuries were little changed and equities were mixed.

The two-year muni-UST ratio Friday was at 69%, the five-year at 66%, the 10-year at 67% and the 30-year at 88%, according to Municipal Market Data’s 3 p.m. EDT read. ICE Data Services had the two-year at 69%, the five-year at 65%, the 10-year at 67% and the 30-year at 88% at a 4 p.m. read.

The tone of the muni market continues to be strong, “although investors took a small step back when UST yields moved higher mid-week, but ratios have remained largely unchanged,” said Barclays strategists led by Mikhail Foux.

The muni market may see additional volatility due to “uncertainties related to the future of tariffs and stronger inflation prints,” they said.

Moreover, muni valuations became less attractive after the rally in September through October, Barclays strategists said.

“However, supply does not seem overwhelming this month, while fund flows should remain robust — thus we remain positive on the market for the last two months of the year,” they said.

“Given a range bound to lower UST market backdrop, next week’s manageable supply should be well digested as investors are reasonably well-funded,” said J.P. Morgan strategists led by Peter DeGroot.

After next week, primary market volume “gaps higher” prior to the Thanksgiving week pause, they said.

“Spreads will likely be more dependent on rates and flows in these elevated supply weeks, given more balanced relative value in the longer portion of the curve,” J.P. Morgan strategists said.

The one- to six-year yield curve remains inverted, after pressure from money markets contributed to the front-end’s underperformance. However, “the pressure seems to be abating, with the SIFMA index adjusted 54bp lower this week, and VRDN dealer inventories dropping from $9 billion to a much more manageable $5 billion,” Barclays strategists said.

Therefore, the front-end may improve significantly in the coming weeks, and the 3s5s index curve should re-steepen, they said.

In the high-yield market, the non-rated bucket — which includes some of the main HY Puerto Rico and MSA Tobacco benchmarks — continues to provide the best value, while double-Bs and single-Bs remain rich by comparison, Barclays strategists said.

“We fully expect the HY index gaining some ground on the [investment-grade] index in the last two months of the year; at the moment, it is at the widest level versus IG in the past 18 months,” they said.

New-issue calendar
The new-issue calendar is at $8.616 billion, with $8.122 billion negotiated deals on tap and $496.2 million of competitives.

Chicago leads the negotiated slate with $1.566 billion of general airport senior lien revenue bonds on behalf of O’Hare International Airport, followed by three other deals just shy of $1 billion.

The competitive calendar is led by Dallas is set to sell $230.875 million of GOs.

AAA scales
MMD’s scale was unchanged: 2.54% in 2026 and 2.46% in 2027. The five-year was 2.41%, the 10-year was 2.75% and the 30-year was 4.14% at 3 p.m.

The ICE AAA yield curve was bumped up to one basis point: 2.55% (unch) in 2026 and 2.47% (-1) in 2027. The five-year was at 2.42% (-1), the 10-year was at 2.75% (-1) and the 30-year was at 4.11% (unch) at 4 p.m.

The S&P Global Market Intelligence municipal curve was unchanged: The one-year was at 2.54% in 2025 and 2.44% in 2026. The five-year was at 2.39%, the 10-year was at 2.75% 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 2.38%, the 10-year at 2.71% and the 30-year at 4.05% at 4 p.m.

Treasuries were little changed.

The two-year UST was yielding 3.554% (flat), the three-year was at 3.563% (flat), the five-year at 3.676% (-1), the 10-year at 4.088% (flat), the 20-year at 4.668% (+2) and the 30-year at 4.696% (+2) near the close.

Primary to come
Chicago (/A+/A+/A+/) is set to price Thursday for O’Hare International Airport $1.566 billion of general airport senior lien revenue bonds, consisting of $1.064 billion of AMT Series E bonds, $479.955 million of non-AMT Series F bonds, and $22.1 million of AMT Series G refunding bonds. Jefferies.

The Black Belt Energy Gas District (A2///) is set to price Wednesday $995 million of gas project revenue bonds, 2025 Series G. Goldman Sachs.

Miami-Dade County, Florida, (Aa3/AA/AA-/AA/) is set to price Thursday $975.915 million of water and sewer system revenue bonds, consisting of $570.55 million of Series A bonds and $405.365 million of Series B refunding bonds. Wells Fargo.

The Los Angeles Municipal Improvement Corp. (/A+/AA//) is set to price Thursday for the Los Angeles Convention Center $967.705 million of lease revenue bonds, consisting of $850.9 million of tax-exempt Series 2025-A and $116.805 million of taxable Series 2025-B bonds. Morgan Stanley.

The Washington State Housing Finance Commission (//BB//) is set to price Wednesday $597.33 million of nonprofit housing revenue and refunding bonds (Horizon House Project), consisting of $404.78 million of Series A, $36.175 million of Series B1, $36.15 million of Series B2 and $130.255 million of Series B3. Ziegler.

The National Finance Authority is set to price Thursday $359.841 million of municipal certificates, consisting of $307.215 million of Series 2025-3, Class A-1; $45.43 million of Series 2025-3, Class A-2; and $7.196 million of Series 2025-3, Class B. Jefferies.

The University of Delaware is set to price Thursday $310.375 million of tax-exempt bonds, Series 2025A. Barclays.

The Central Florida Expressway Authority (Aa3/AA-//) is set to price Thursday $277.21 million of senior lien revenue bonds, Series 2025A. BofA Securities.

Franklin County, Ohio, (Aa2//AA/) is set to price Wednesday $233.46 million of hospital refunding and improvement revenue bonds (Nationwide Children’s Hospital), Series 2025A. J.P. Morgan.

The Monroe County Industrial Development Corp. (Aa3/AA-//) is set to price Thursday $223.215 million of revenue bonds (University of Rochester Project), consisting of $122.445 million of non-AMT Series 2025A bonds and $100.77 million of taxable Series 2025B bonds. BofA Securities.

The Santa Monica-Malibu Unified School District, California, (Aa1/AA+//) is set to price Thursday $130 million of GOs, consisting of $127.675 million of tax-exempts and $2.325 million of taxables. Baird.

The Ohio Housing Finance Agency (Aa1///) is set to price Wednesday $130 million of non-AMT social residential mortgage revenue bonds (Mortgage-Backed Securities Program), 2025 Series D. Raymond James.

The Ohio County Commission, West Virginia (/BBB//) is set to price Wednesday $107.325 million of special district excise tax refunding and improvement revenue bonds (Fort Henry Economic Opportunity Development District — The Highlands Project), Series 2025 A. Piper Sandler.

Competitive
Dallas is set to sell $230.875 million of GOs, Series 2025, at 11:15 a.m. Eastern Wednesday.

The Virginia Housing Development Authority is set to sell $102.78 million of non-AMT rental housing bonds, 2025 Series F, 11 a.m. Thursday.