Municipal bond yields rose up entrance for the second consecutive session as traders digested one other hefty new-issue calendar led by retail choices from California and Connecticut, whereas U.S. Treasuries noticed losses throughout the curve and equities have been down.
Triple-A yields rose as much as 5 foundation factors on the quick finish, relying on the curve. The 2-year muni-UST ratio Wednesday was at 59%, the five-year at 59%, the 10-year at 70% and the 30-year at 89%, in keeping with Municipal Market Knowledge’s 3 p.m. ET learn. ICE Knowledge Providers had the two-year at 59%, the five-year at 60%, the 10-year at 70% and the 30-year at 90% at a 3 p.m. learn.
The ultimate days of the third quarter have each “introduced a curler coaster trip in yields and shifted outlooks for This fall,” mentioned Kim Olsan, senior fastened revenue portfolio supervisor at NewSquare Capital.
“A modest bear flattener has emerged and moved the 5-year/1-year MMD slope to simply 1 foundation level,” Olsan mentioned. “The 1-3 12 months vary grew to become overbought earlier within the month on optimism of a fee minimize and should have turned out to be a buy-the-rumor-sell-the-news commerce.”
Throughout the final three months, one-year maturities “have seen a one-way commerce down in yield
A rally earlier this month in bids wanteds “substantiated higher threat taking however seems to have negated lively promoting as effectively,” Olsan mentioned, highlighting that Bloomberg calculations for each day bid listing quantity present a median of $985 million for September.
This determine, she added, is “effectively under the $1.27 billion determine within the prior eight months” as “demand by high quality and tenor is extra fragmented as patrons steadiness length towards credit score power.”
Municipal fund flows have remained sturdy in current weeks. Inflows totaled $1.136 billion for the week ending Sept. 17, in keeping with the Funding Firm Institute. Trade-traded funds noticed inflows of $953 million for a similar reporting interval.
Tax-exempt municipal cash market funds noticed inflows of $37.1 million for the week ending Monday following $1.314 billion of outflow the week prior, in keeping with the Cash Fund Report, a weekly publication of EPFR. The inflows convey whole property to $136.988 billion.
The common seven-day easy yield for all tax-free and municipal money-market funds fell to 2.29% from 2.35% per week prior.
“Muni issuance stays heavy with continued investor absorption, and with market alternatives presenting themselves, muni fund flows have been fairly sturdy,” in keeping with a New York strategist.
Transferring out additional alongside the muni yield curve finds that “valuations change into cheaper,” which is “exhibited by the steepness of the curve,” the strategist mentioned.
“After spending prolonged time in a efficiency holding tank, lengthy bond efficiency has been exhibiting meaningfully improved returns,” the strategist mentioned.
Expectations for “1-2 extra coverage fee cuts by the top of the 12 months” will assist the pattern of cash from low-yielding money and cash market funds “flowing into mutual fund complexes to seize and protect tax-advantaged worth,” the strategist mentioned. “This dynamic tends to advertise length extensions as the danger/reward calculus turns into extra compelling.”
“Whereas unexpected information with a displacement within the Treasury market that will derail the easing trajectory, or maybe a credit score or liquidity occasion, might impression fund movement exercise, such circumstances are usually not anticipated,” the strategist added.
Within the main market Wednesday, Wells Fargo priced for retail traders $2.149 billion of GOs for California (Aa2/AA-/AA//). The primary tranche, $689.545 million of varied objective GOs, noticed 5s of 8/2026 at 2.21%, 5s of 2031 at 2.49%, 5s of 2035 at 3.05%, 5s of 2041 at 3.78%, 5s of 2044 at 4.06%, 5s of 2050 at 4.31% and 5.25s of 2055 at 4.31%, callable 8/2035.
The second tranche, $1.46 billion of varied objective refunding GOs, noticed 5s of two/2026 at 2.21%, 5s of 8/2026 at 2.21%, 5s of 8/2030 at 2.33%, 3s of 8/2030 at 2.48%, 5s of 8/2035 at 3.05% and 5s of 8/2045 at 4.12%, callable 8/2035.
BofA Securities priced for the Texas Water Growth Board (/AAA/AAA/) $1.846 billion of Grasp Belief state water implementation income fund income bonds, with 5s of 4/2026 at 2.26%, 5s of 10/2026 at 2.28%, 5s of 4/2030 at 2.36%, 5s of 10/2030 at 2.39%, 5s of 4/2035 at 3.06%, 5s of 10/2035 at 3.12%, 5s of 10/2040 at 3.76%, 4.5s of 10/2045 at 100%, 4.75s of 10/2050 at 4.72%, 4.75s of 10/2055 at 100% and 5s of 10/2060 at 4.60%, callable 10/2035.
Morgan Stanley priced for retail traders $1.515 billion of GOs for Connecticut (Aa2/AA-/AA/AA+). The primary tranche, $800 million of Sequence C bonds, noticed 5s of 8/2026 at 2.36%, 5s of 2030 at 2.43%, 5s of 2035 at 3.15%, 5s of 2040 at 3.79% and 5s of 2045 at 4.25%, callable 8/2035.
The second tranche, $714.62 million of Sequence 2025D refunding bonds, noticed 5s of 08/2026 at 2.36%, 5s of 2030 at 2.43% and 5s of 2035 at 3.15%. Noncall.
AAA scales
MMD’s scale was minimize as much as three foundation factors: 2.21% (+3) in 2026 and a couple of.11% (+3) in 2027. The 5 12 months was at 2.19% (unch), the 10-year was at 2.91% (unch) and the 30-year was at 4.24% (unch) at 3 p.m.
The ICE AAA yield curve noticed small cuts: 2.17% (+1) in 2026 and a couple of.12% (+5) in 2027. The five-year was at 2.20% (+4), the 10-year was at 2.90% (+3) and the 30-year was at 4.26% (+2) at 3 p.m.
The S&P World Market Intelligence municipal curve was minimize: The one-year was at 2.20% (+4) in 2025 and a couple of.10% (+4) in 2026. The five-year was at 2.19% (unch), the 10-year was at 2.91% (unch) and the 30-year yield was at 4.25% (unch) at 3 p.m.
Bloomberg BVAL was minimize: 2.12% (+5) in 2025 and a couple of.09% (+5) in 2026. The five-year at 2.18% (+5), the 10-year at 2.88% (+3) and the 30-year at 4.22% (+1) at 3 p.m.
Major to return
Texas (/AAA/AAA/) is ready to cost Thursday $761.98 million of GO water monetary help bonds (State Water Plan), with $444.725 million of Sequence 2025E bonds and $317.245 million of taxable Sequence 2025F bonds. BofA Securities.
The Michigan State Housing Growth Authority (Aa2/AA+//) is ready to cost Thursday $547.5 million of single-family mortgage income bonds, consisting of $412.105 million of non-AMT bonds, Sequence 2025C, and $135.395 million of taxables, Sequence 2025D. RBC Capital Markets.
Aggressive
The North Texas Municipal Water District (Aa2/AAA//) is ready to promote $286.84 million of regional wastewater system income refunding and enchancment bonds at 11:30 a.m. Thursday.
The North Texas Municipal Water District (Aa1/AAA//) is ready to promote $152.18 million of Higher East Fork wastewater interceptor system contract income refunding and enchancment bonds at midday on Thursday.
The Pinellas County Faculty District is ready to promote $150 million of tax anticipation notes at 11 a.m. Thursday.
