Munis little changed amid a busy primary market

Municipals were little changed Wednesday amid a busy new-issue calendar as U.S. Treasury yields fell and equities ended up.

The two-year muni-UST ratio Wednesday was at 64%, the five-year at 65%, the 10-year at 74% and the 30-year at 93%, according to Municipal Market Data’s 3 p.m. ET read. ICE Data Services had the two-year at 61%, the five-year at 66%, the 10-year at 72% and the 30-year at 92% at a 4 p.m. read.

The Investment Company Institute Wednesday reported $263 million of inflows for the week ending July 2, following $618 million of inflows the previous week.

Exchange-traded funds saw inflows of $662 million after $966 million of inflows the week prior, per ICI data.

“Municipal outperformance against taxable sectors has moved short-term ratios on or through their 252-day moving averages, while intermediate and long maturities are holding at or above average ranges,” said Kim Olsan, senior fixed income portfolio manager at NewSquare Capital.

Tax-exempt yields are “enjoying a just-right time with enough redemption demand matching whatever supply is being issued,” she said.

Inquiry for local names in New York, New Jersey, Connecticut and Massachusetts “is holding spreads to negative values against AAA spots in many cases,” she said.

“An ongoing push on the short end of the curve has forced yields in daily and weekly resets well through 2.00% and moved 1-3 year AAA reference spots below 2.50%,” Olsan said.

“The mismatch in demand on the wings of the curve has bear steepened the slope above 200 basis points,” she said.

A pricing of Tomball Independent School, Texas, bonds (PSF-Aaa/AAA with Aa1/AA+ underlying ratings) offered 5s due 2027 at 2.58% (66% ratio/UST) but the 5s in 2045 came at 4.63% to a 2035 call (105%/10-year UST), Olsan said.

AAA-rated credits are “having a moment,” she said, as “both primary and secondary market flows point to greater need and fewer opportunities.”

“The share of AAA-rated secondary trades (>$ 1million par value) between January and May ran between 24% and 26%,” Olsan said. “Since the start of June, the category has held an average of 26% market share. Yesterday’s session in AAA-rated names drew 28% of all volume.”

“Market returns in 2025 suggest buyers are taking some comfort in the ratings security of AAA issues during volatile cycles,” she said. “Any forthcoming dislocation in supply vs. demand might lend greater support to the highest-rated sector.”

In the primary market Wednesday, Goldman Sachs held a one-day retail order for the California State University Trustees’ (Aa2/AA-//) $1.613 million of Series A systemwide revenue bonds, with 5s of 11/2026 at 2.40%, 5s of 2030 at 2.53%, 5s of 2035 at 3.25%, 5s of 2040 at 4.03%, 5s of 2045 at 4.51%, 5.25s of 2050 at 4.68% and 5.25s of 2056 at 4.75%, callable 11/1/2035.

Barclays priced for the Washington Metropolitan Area Transit Authority (/AA//AA/) $653.5 million of Series 2025A second lien dedicated revenue bonds, with 5.25s of 7/2050 at 4.88%, 5.25s of 2055 at 4.95%, 5s of 2060 at 5.10% and 5.5s of 2060 at 5.00%, callable 7/15/2035.

Cabrera Capital Markets priced for the Mesquite Independent School District, Texas, (/AAA/AAA/) $493.915 million of PSF-insured unlimited tax school building and refunding bonds, with 5s of 8/2026 at 2.56%, 5s of 2030 at 2.72%, 5s of 2035 at 3.47%, 5s of 2040 at 4.16%, 5s of 2045 at 4.64%, 4.5s of 2049 at 4.86%, 5s of 2049 at 4.79% and 5.25s of 2052 at 4.82%, callable 8/15/2035.

Jefferies priced for the Waller Independent School District, Texas, (Aaa/AAA//) $398.715 million of PSF-insured unlimited tax school building bonds, with 5s of 2/2027 at 2.62%, 5s of 2030 at 2.76%, 5s of 2035 at 3.45%, 5s of 2040 at 4.22%, 5s of 2045 at 4.68%, 5.25s of 2050 at 4.82% and 5.25s of 2056 at 4.88%, callable 2/15/2035.

Jefferies preliminarily priced for Collin County, Texas, a $228.295 million deal. The first tranche, $220.365 million of limited tax permanent improvement and refunding bonds (Aaa/AAA//), saw 5s of 2/2026 at 2.61%, 5s of 2030 at 2.74%, 5s of 2035 at 3.45%, 5s of 2040 at 4.16% and 5s of 2045 at 4.63%, callable 2/15/2035.

The second tranche, $7.93 million of tax notes (/AAA//), saw 5s of 2/2026 at 2.61% and 5s of 2027 at 2.61%, noncall.

Piper Sandler priced for the Foothill-De Anza Community College District, California, (Aaa/AAA//) $151 million of Election of 2020 GOs, Series D, with 5s of 8/2026 at 2.22%, 5s of 2027 at 2.22%, 5s of 2036 at 3.12%, 5s of 2040 at 3.74% and 5s of 2045 at 4.29%, callable 8/1/2035.

BOK Financial Securities priced and repriced for the Anna Independent School District, Texas, (/AAA//) $133.135 million of PSF-insured unlimited tax school building bonds, with yields bumped up to six basis points: 5s of 2/2027 at 2.65% (-3), 5s of 2030 at 2.77% (-3), 5s of 2035 at 3.50% (-2), 5s of 2040 at 4.24% (unch), 5s of 2045 at 4.69% (-2), 5.25s of 2050 at 4.83% (-1) and 5.25s of 2055 at 4.88% (-6), callable 2/15/2035.

In the competitive market, San Jose, California, (Aa1//AAA/) sold $183.975 million of GOs to BofA Securities, with 5s of 9/2030 at 2.25%, 5s of 2035 at 2.92%, 5s of 2040 at 3.69%, 5s of 2045 at 4.26%, 5s of 2050 at 4.47% and 5s of 2055 at 4.57%, callable 3/1/2035.

Frisco, Texas, (Aaa/AAA//) sold $149.185 million of GO refunding and improvement bonds to Wells Fargo, with 5s of 2/2026 at 2.56%, 5s of 2030 at 2.71%, 5s of 2035 at 3.42%, 4s of 2040 at 4.279% and 4.75s of 2045 at par, callable 2/15/2035.

Washington County, Oregon, (Aaa///) sold $136.9 million of full faith and credit obligations to Morgan Stanley, with 5s of 6/2026 at 2.48%, 5s of 2030 at 2.60%, 5s of 2035 at 3.30%, 5s of 2040 at 3.94% and 5s of 2042 at 4.17%, callable 6/1/2035.

The Greater Fall River Regional Vocational Technical School District, Massachusetts, (Aa2///) sold $104.995 million of state-qualified GO school project loan chapter 70B bonds to Jefferies, with 5s of 6/2027 at 2.46%, 5s of 2030 at 2.55%, 5s of 2035 at 3.25%, 5s of 2040 at 4.05%, 5s of 2045 at 4.54%, 5s of 2049 at 4.71% and 5s of 2055 at 4.80%, callable 6/1/2034.

AAA scales
MMD’s scale was unchanged: The one-year was at 2.46% and 2.46% in two years. The five-year was at 2.55%, the 10-year at 3.22% and the 30-year at 4.55% at 3 p.m.

The ICE AAA yield curve bumped up to three basis points: 2.47% (-3) in 2026 and 2.41% (-3) in 2027. The five-year was at 2.62% (-2), the 10-year was at 3.17% (-1) and the 30-year was at 4.52% (unch) at 4 p.m.

The S&P Global Market Intelligence municipal curve was little changed: The one-year was at 2.46% (-1) in 2025 and 2.47% (-1) in 2026. The five-year was at 2.56% (unch), the 10-year was at 3.21% (unch) and the 30-year yield was at 4.54% (unch) at 4 p.m.

Bloomberg BVAL was bumped up to a basis point: 2.49% (-1) in 2025 and 2.51% (-1) in 2026. The five-year at 2.61% (-1), the 10-year at 3.16% (-1) and the 30-year at 4.53% (unch) at 4 p.m.

Treasuries saw gains.

The two-year UST was yielding 3.857% (-4), the three-year was at 3.21% (-4), the five-year at 3.916% (-6), the 10-year at 4.337% (-6), the 20-year at 4.864% (-6) and the 30-year at 4.87% (-6) just before the close.

FOMC meeting minutes
Differing assumptions about how tariffs will impact inflation led to divergent opinions on the Federal Open Market Committee, minutes of its June 17-18 meeting showed.

While a “few” members expect tariffs to be a one-time hit to short-term inflation, most officials expect “tariffs could have more persistent effects on inflation, and some highlighted the fact that such persistence could also affect inflation expectations,” the minutes said.

Since inflation has been above the Fed’s target rate “for some time, there was a heightened risk of longer-term inflation expectations becoming unanchored if there is a long-lasting rise in inflation.”

Data suggested solid economic growth and low unemployment. Inflation “remained somewhat elevated” despite recent improvement.

“Participants judged that uncertainty about the outlook was elevated amid evolving developments in trade policy, other government policies, and geopolitical risks, but that overall uncertainty had diminished since the previous meeting,” the minutes showed.

This uncertainty could restrain economic activity in the near term, some said.

Officials “generally agreed” the committee could “wait for more clarity on the outlook for inflation and economic activity” before adjusting rates.

While most participants expect rates to be cut this year, “a couple of participants noted that, if the data evolve in line with their expectations, they would be open to considering a reduction in the target range for the policy rate as soon as at the next meeting.”

The minutes “underscored the lack of urgency to cut rates anytime soon,” said BMO Senior Economist Priscilla Thiagamoorthy. While the minutes said some officials would consider a cut in July, she said, “That’s not a complete surprise, since both [Gov. Christopher] Waller and [Michelle] Bowman recently signaled they would be in favor of easing later this month if the data evolved as they expected.”

Primary to come
The Spring Independent School District, Texas, (Aaa/AAA//) is set to price Thursday $590.865 million of PSF-insured unlimited tax school building and refunding bonds, Siebert Williams Shank.

The Local Building Authority of Alpine School District, Utah, (Aa2//AA+/) is set to price Thursday $201.045 million of West School District lease revenue bonds. Morgan Stanley.

The Flour Bluff Independent School District, Texas, (/AAA//) is set to price Thursday $193.49 million of PSF-insured unlimited tax school building bonds Ramirez.

The Public Finance Authority is set to price $175 million of nonrated tax-exempt pooled securities, Series 2025-1 Class A certificates. J.P. Morgan.

The Public Finance Authority is set to price Thursday $150.212 million of Cuyahoga River Capital Portfolio municipal certificates, Series 20205-1 Class A. HilltopSecurities.

El Paso, Texas, (/AA//AA+/) is set to price Thursday $102.565 million of GO refunding bonds. Jefferies.

Competitive
Miami-Dade County, Florida, (Aa2/AA//) is set to sell $242.195 million of BuildingBetter Communities Program GO refunding bonds, Series 2025A, at 9:30 a.m. Thursday.

Gary Siegel contributed to this story.