Coming off a volatile week, munis strengthened Monday though the market movements were smaller than the past several trading days. U.S. Treasury yields fell and equities ended up.
The firmness Monday came from a "settling down" of things in the market, after one of its most volatile weeks since the 2020 COVID-19 pandemic, and the pullback of UST yields, with munis following suit, said Cooper Howard, a fixed income strategist at Charles Schwab.
The markets are trying to digest and determine everything that has happened as of late, including the good news about tech tariffs over the weekend, he said.
Despite this, there are still concerns over the levels of tariffs and the uncertainty in the markets and economy, Howard said.
"So even though we got good news about tech tariffs, the question is, 'Is that going to last?'" he noted.
The market whipsawed at the start of the last week in anticipation of President Trump's announced sharp increases in global tariffs. However, the rout was followed by a sharp bounce-back on Thursday after he put a 90-day hold on tariffs on non-retaliating countries and the release of favorable consumer price index data, only to see those gains erased on Friday.
"Each day saw massive intraday swings as sentiment oscillated between fear of an economic collapse and hope that tariffs might be rolled back," analysts at Birch Creek Capital said. At the same time, "bottom feeders began to emerge at these eye-popping levels and the tone seemed to stabilize."
While Trump's announcement of a pause "sparked a dramatic turnaround, there is still considerable uncertainty for the coming months and the administration clarified that all the other newly implemented tariffs would remain in place," the firm said.
The turmoil caused several issuers to postpone their new offerings until after the markets calm down, which is slated to result in a large spate of offerings this week.
Monday, though, saw at least two sizable deals accelerated.
In the primary market Monday, J.P. Morgan preliminarily priced for Oregon (Aa1/AA+/AA+/) $629.295 million of GOs. The first tranche, $469.08 million of non-AMT Series A bonds, saw 5s of 5/2026 at 3.16%, 5s of 2030 at 3.35%, 5s of 2035 at 3.73%, 5s of 2040 at 4.23%, 5.25s of 2045 at 4.57% and 5.25s of 2050 at 4.69%, callable 5/1/2035.
The second tranche, $150.845 million of non-AMT Series C bonds, saw 5s of 6/2026 at 3.17%, 5s of 2030 at 3.35%, 5s of 2035 at 3.74%, 5s of 2040 at 4.24% and 5.25s of 2045 at 4.57%, callable 6/1/2035.
The third tranche, $9.37 million of non-AMT Series D bonds, saw 5s of 5/2026 at 3.16%, 5s of 2030 at 3.35%, 5s of 2035 at 3.73% and 5s of 2040 at 4.23%, callable 5/1/2035.
BofA Securities priced for Hawaii County (/AA+/AA+/) $139.325 million of GOs, with 5s of 9/2026 at 3.27%, 5s of 2030 at 3.50%, 5s of 2035 at 3.88%, 5s of 2040 at 4.26%, 5.25s of 2045at 4.70% and 5.25s of 2049 at 4.82%, callable 9/1/2035.
In the competitive market, the Tennessee State School Bond Authority (Aa1/AA+/AA+/) sold $160.495 million of higher educational facilities second program bonds, Series 2025A, to BofA Securities, with 5s of 11/2025 at 3.30%, 5s of 2030 at 3.38%, 5s of 2035 at 3.68%, 5s of 2040 at 4.04%, 5s of 2045 at 4.52%, 5s of 2050 at 4.66% and 5s of 2055 at 4.73%, callable 11/1/2034.
Monday saw yields fall six to 12 basis points, depending on the scale, but they still remain high.
Muni yields "hit their highest level in decades" Wednesday before having one of the largest rallies on record on Thursday, said Jason Wong, vice president of municipals at AmeriVet Securities.
But that was followed by Friday's selloff, with yields rising by as much as 28 basis points, he noted.
Yields on 30-year notes reached 4.85% on Wednesday, their highest level since 2011, pushing the 30-year muni-to-Treasury ratio above 100% for the first time since December 2022, before settling down to 95.78% by the end of the week.
Ratios in shorter-term notes saw similar increases in ratios, with the five-year ratio surpassing 86% and the 10-year ratio rising above 88%.
Although ratios retreated somewhat after that, they are still cheaper than at the beginning of the year, Wong said.
The two-year ratio Monday was at 81%, the five-year at 81%, the 10-year at 81% and the 30-year at 95%, according to Municipal Market Data's 3 p.m. EDT read. ICE Data Services had the two-year at 77%, the five-year at 76%, the 10-year at 78% and the 30-year at 93% at 4 p.m.
As a result of market volatility, secondary trading last week totaled over $67.8 billion, with 52% of trades being dealer sells, and most of the volume occurred on Wednesday. Wong said.
Due to market turmoil, a record amount of bids-wanted sold off. According to Bloomberg, approximately $12.93 billion was put up for the bid, with Tuesday having over $3 billion in bids-wanted alone.
Investors continued to pull money from muni bond funds for the fifth straight week, according to LSEG Lipper. Last week's outflows of $3.3 billion was up sharply from the prior week's total of $232 million and was the largest weekly total in nearly three years.
Birch Creek Capital said it doesn't "foresee volatility dramatically slowing down any time soon."
"Negative returns typically lead to fund outflows which can start a self-perpetuating cycle,' the firm said. "We still believe the high-grade muni sector should emerge a winner in an economic downturn and believe it makes sense to leg into the market, especially on days with the largest dislocations."
AAA scales
MMD's scale was bumped 10 to 12 basis points: The one-year was at 3.09% (-12) and 3.11% (-12) in two years. The five-year was at 3.25% (-12), the 10-year at 3.56% (-10) and the 30-year at 4.54% (-10) at 3 p.m.
The ICE AAA yield curve was bumped six to 10 basis points: 3.05% (-6) in 2026 and 3.06% (-7) in 2027. The five-year was at 3.17% (-8), the 10-year was at 3.49% (-9) and the 30-year was at 4.50% (-10) at 4 p.m.
The S&P Global Market Intelligence municipal curve was bumped six to eight basis points: The one-year was at 3.06% (-7) in 2025 and 3.07% (-6) in 2026. The five-year was at 3.25% (-7), the 10-year was at 3.54% (-8) and the 30-year yield was at 4.53% (-8) at 4 p.m.
Bloomberg BVAL was bumped 10 to 11 basis points: 2.90% (-11) in 2025 and 2.97% (-10) in 2026. The five-year at 3.14% (-10), the 10-year at 3.47% (-10) and the 30-year at 4.50% (-10) at 4 p.m.
Treasuries saw gains.
The two-year UST was yielding 3.848% (-12), the three-year was at 3.871% (-14), the five-year at 4.016% (-15), the 10-year at 4.379% (-11), the 20-year at 4.845% (-9) and the 30-year at 4.806% (-7) near the close.
Primary to come
The Los Angeles Department of Airports (Aa3//AA-/) is set to price Wednesday a deal $1.477 billion on behalf of the Los Angeles International Airport, with $928.48 million of green governmental purpose/non-AMT subordinate revenue and refunding revenue bonds, 2025 Series D, serials 2027-2045, terms 2048, 2051; $476.135 million of governmental purpose/non-AMT subordinate revenue and refunding revenue bonds, 2025 Series E, serials 2026-2045, terms 2050, 2055; and $72.765 million of private activity/AMT subordinate refunding revenue bonds, 2025 Series F, serials 2026-2030, 2033-2035. Ramirez.
The Dormitory Authority of the State of New York (Aa3/AA-/AA/) is set to price Tuesday $466.55 million of revenue bonds on behalf of the Memorial Sloan Kettering Cancer Center, consisting of $234.24 million of Series S1, $117.38 million of Series 2-A and $114.93 million of Series 2-B. J.P. Morgan.
The
The Jersey City Municipal Utilities Authority is set to price Wednesday $252.225 million of BAM-insured and non-BAM-insured obligations, Series 2025. Stifel.
The Rio Hondo Community College District, California, (Aa2///) is set to price Wednesday $201.14 million of dedicated unlimited ad valorem property tax Election of 2024 GOs, Series A, serials 2026-2027, 2036-2045, terms 2050, 2055. Cabrera Capital Markets.
The Houston Independent School District, Texas, (Aaa/AAA//) is set to price Wednesday $186.155 million of PSF-insured limited tax refunding bonds, Series 2025B, serial 2026. RBC Capital Markets.
The Hayward Unified School District, California, (A1/AA//) is set to price Tuesday $160.48 million of Assured Guaranty-insured GOs, consisting of $61.49 million of Election of 2024 bonds, Series 2025A; $29.605 million of refunding bonds, Series 2025A; and $42.975 million of Series 2025B. RBC Capital Markets.
The Western Michigan University Board of Trustees (Aa3/A//) is set to price Wednesday $159.44 million of general revenue refunding bonds, Series 2025A, serials 2025-2045, terms 2049, 2054. Barclays.
The New York City Housing Development Corp. (Aa2/AA+//) is set to price Tuesday $157.245 million of sustainable development multi-family housing revenue bonds, consisting of $63.89 million of 2025 Series B-1, serials 2030-2037, terms 2040, 2045, 2050, 2055, 2060, 2064, and $93.355 million of Series B-2, term 2064. Barclays.
The Phoenix Union High School District No. 210, Arizona, (Aa1/AA/AAA/) is set to price Wednesday $151.235 million of Project of 2023 school improvement bonds, Series B, serials 2025-2032.Stifel.
The Manteca Unified School District, California, (Aa2///) is set to price Tuesday $149.54 million of GOs, consisting of $130 million of Election of 2020 Series C bonds and $19.54 million of refunding bonds. Piper Sandler.
The Gunnison County Housing Authority (/AA//) is set to price Tuesday $118.18 million of BAM-insured Whetstone Housing Project general revenue bonds, serials 2027-2045, terms 2047, 2050, 2055, 2059. Northland Securities.
The Osceola County School District, Florida, (Aa2//AA/) is set to price Tuesday $106.505 million of capital outlay sales tax revenue bonds, serials 2026-2036. Raymond James.
Competitive
North Carolina is set to sell $300 million of Build NC limited obligation bonds, Series 2025A, at 11 a.m. eastern Tuesday.
Jessica Lerner contributed to this story.
