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Munis have been little modified to begin the month as U.S. Treasuries noticed losses and equities have been blended.
The 2-year muni-UST ratio Monday was at 68%, the five-year at 64%, the 10-year at 67% and the 30-year at 88%, in line with Municipal Market Knowledge’s 3 p.m. EDT learn. ICE Knowledge Companies had the two-year at 69%, the five-year at 65%, the 10-year at 68% and the 30-year at 88% at a 4 p.m. learn.
The muni market outperformed USTs final week, falling solely “modestly” after massive price strikes took maintain, mentioned Birch Creek strategists.
MMD’s scale noticed yields minimize two to 3 foundation factors out to 10 years and 5 foundation factors in 30 years, whereas sellers famous a “very constructive tone” available in the market, they mentioned.
Muni mutual funds noticed strong inflows of $719.9 billion, pushed by $2.5 billion of inflows into exchange-traded funds, whereas open-end funds appeared to see massive outflows of $1.8 billion, in line with J.P. Morgan strategists led by Peter DeGroot.
“Nonetheless, this sharp divergence is essentially attributable to at least one fund advanced changing a few of its open-end funds (~$2.3 billion) into ETFs,” they mentioned.
If adjusted, inflows into ETFs ought to have been nearer to $200 million, and open-end fund flows would have been optimistic at round $500 million, in line with J.P. Morgan strategists.
Moreover, the market has gotten previous “what was purported to be a seasonally weak stretch of efficiency for the muni market the place provide outpaces redemption money, however as a substitute we completed the month with one of the best October return in 30 years,” Birch Creek strategists mentioned.
“Normalized provide, a supportive price setting, and favorable technicals propelled the municipal market to one of the best October efficiency [in decades],” mentioned Robert J. Lind.
Funding-grade munis noticed positive aspects of 1.24% in October, whereas high-yield munis noticed optimistic returns of 1.00%.
“Each municipal indices have been optimistic for the third straight month because the asset class is buoyed by a sturdy basic backdrop and regular investor demand,” Lind mentioned.
Issuance final month was $55.348 billion, down 16.8% from $66.513 billion in 2024. Nonetheless, it remained above October’s 10-year common of $49.033 billion.
Heading into yr finish, market members are “particularly optimistic” as this can be a time the place “usually robust months [are] outlined by heavy reinvestment money to help demand whereas deal circulate slows down over a number of vacation and trip durations,” Birch Creek strategists mentioned.
Major market concessions have fallen over the previous a number of weeks and, in some circumstances, new points have priced “on prime of and even by way of secondary market spreads, which is driving extra members and higher inquiry into the secondary market,” they mentioned.
“Whereas a significant rise in rates of interest would absolutely knock the wind out of the muni market’s optimism, a number of sellers anticipate any backup can be effectively bid and would soften the blow,” Birch Creek strategists mentioned.
Within the major market Monday, J.P. Morgan priced for the Southeast Power Authority (Aa3///) $2.699 billion of power provide income bonds, Collection 2025E, with 5s of 10/2027 at 3.23% and 5s of 2030 at 3.38%, callable 7/1/2030.
AAA scales
MMD’s scale was unchanged: 2.56% in 2026 and a pair of.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 minimize one to 2 foundation factors: 2.56% (+1) in 2026 and a pair of.47% (+1) in 2027. The five-year was at 2.42% (+2), the 10-year was at 2.78% (+2) and the 30-year was at 4.12% (+1) at 4 p.m.
The S&P International Market Intelligence municipal curve was unchanged: The one-year was at 2.55% in 2025 and a pair of.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 little modified: 2.52% (unch) in 2025 and a pair of.47% (unch) in 2026. The five-year at 2.37% (unch), the 10-year at 2.72% (unch) and the 30-year at 4.07% (+1) at 4 p.m.
Treasuries have been weaker.
The 2-year UST was yielding 3.601% (+3), the three-year was at 3.608% (+3), the five-year at 3.717% (+3), the 10-year at 4.108% (+3), the 20-year at 4.664% (+4) and the 30-year at 4.691% (+4) close to the shut.
Major to return
The Los Angeles Division of Water and Energy (Aa2//AA-/AA/) is ready to cost Thursday $977.65 million of water system income refunding bonds, Collection 2025C. RBC Capital Markets.
Ohio (Aaa/AAA/AAA/) is ready to cost Wednesday $510.635 million of GOs, consisting of $294.195 million of Collection C, $171.51 million of Collection D and $44.93 million of Collection A. Morgan Stanley.
Austin (Aa3/AA-/AA-/) is ready to cost Tuesday $418.81 million of electrical utility system income refunding bonds. Morgan Stanley.
The town (A1/A+//AA-/) can also be set to cost Thursday $224.115 million of AMT airport system income refunding bonds, Siebert Williams Shank.
The Lee County Faculty Board (Aa3//AA-/) is ready to cost Tuesday $392.63 million of certificates of participation, consisting of $330.24 million of Collection A and $62.39 million of Collection B. BofA Securities.
The Illinois Finance Authority (A1/A+/AA-/) is ready to cost Tuesday $389.995 million of Rush College System for well being income bonds. BofA Securities.
North Carolina (Aaa/AAA/AAA/) is ready to cost Wednesday $327.95 million of GO refunding bonds, consisting of $147.885 million of Collection 2025C bonds and $180.065 million of Collection 2026A ahead supply bonds. BofA Securities.
Chicago (/A+/A+/A+/) is ready to cost Tuesday $327.51 million of Chicago O’Hare Worldwide Airport normal airport senior lien income bonds, consisting of $207.19 million of Collection 2025A AMT bonds and $129.32 million of Collection 2025B non-AMT bonds. Cabrera Capital Markets.
The Higher Orlando Aviation Authority (/BB+//) is ready to cost Tuesday $257.7 million of particular objective airport services income bonds (United Airways Venture), Collection 2025. J.P. Morgan.
The Waste Professional USA Venture is ready to cost $200 million of nonrated strong waste disposal income bonds by way of the Florida Improvement Finance Corp., the Mississippi Enterprise Finance Corp. and the Louisiana Public Amenities Authority. Barclays.
Maryland Group Improvement Administration (Aa1//AA+/) is ready to cost Tuesday $180 million of taxable social residential income bonds, 2025 Collection H. RBC Capital Markets.
The Fort Collins-Loveland Water District, Colorado, (/AA+//) is ready to cost Tuesday $161.32 million of water enterprise income bonds. Stifel Nicolaus.
The Huntsville Well being Care Authority (A1///) is ready to cost Tuesday $160 million of Collection 2025B bonds. BofA Securities.
The Colton Joint Unified Faculty District, California, (Aa3/AA//) is ready to cost Tuesday $151.07 million of BAM-insured election of 2024 GO bonds, Collection A, consisting of $106.91 million of capital listed bonds and $44.16 million of capital appreciation bonds. Stifel Nicolaus.
Irvine, California, (/AA//) is ready to cost Wednesday $131.37 million of Group Amenities District No. 2013-3 (Nice Park) Enchancment Space No. 11 particular tax bonds, 2025, insured by Assured Warranty, consisting of $127.825 million of capital listed bonds and $3.55 million of capital appreciation bonds. Stifel Nicolaus.
The New York State Housing Finance Company (Aa2///) is ready to cost Thursday $115.51 million of sustainability inexpensive housing income bonds, 2025 Collection E. J.P. Morgan.
The Missouri Improvement Finance Board is ready to cost Wednesday $100.315 million of nonrated tax-exempt tax increment and particular district income bonds (Lakeport Village Venture), Collection 2025A. Stifel Nicolaus.
The American Municipal Energy (A1/A//) is ready to cost Tuesday $100.2 million of Greenup Hydroelectric Venture income refunding bonds, Collection 2025A. Wells Fargo.
Aggressive
Washington (Aaa/AA+/AA+/) is ready to promote $540.065 million of varied objective GO refunding bonds, Collection R-2026A, at 10:15 a.m. Japanese on Wednesday; and $226.815 million of motorized vehicle gasoline tax and vehicle-related charges GO refunding bonds, Collection R-2026B, at 10:45 a.m. Wednesday.
The Illinois State Toll Freeway Authority (Aa3/AA-/AA-/) is ready to promote $500 million of toll freeway senior income bonds, Collection 2025A, at 10:15 a.m. Tuesday.
King County, Washington, (Aa1/AA+//) is ready to promote $267.52 million of sewer income and refunding bonds, Collection 2025A, at 10:45 a.m. Thursday.
The Charleston County Faculty District, South Carolina, (/AA+//) is ready to promote $135.57 million of GOs, Collection 2025B (South Carolina Faculty District Enhancement Program), at 11 a.m. Tuesday.
Hennepin County, Minnesota, (//AAA/) is ready to promote $135.57 million of GOs, Collection 2025A, at 10:45 Tuesday.
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