Bond markets have been quiet Tuesday forward of
The 2-year muni-UST ratio Tuesday was at 70%, the five-year at 65%, the 10-year at 68% and the 30-year at 91%, in keeping with Municipal Market Information’s 3 p.m. EDT learn. ICE Information Providers had the two-year at 69%, the five-year at 66%, the 10-year at 68% and the 30-year at 89% at a 4 p.m. learn.
October may very well be one of many strongest months for muni traders, stated Tom Kozlik, managing director and head of public coverage and municipal technique at HilltopSecurities.
Whereas November and December are anticipated to stay constructive, the ultimate two months of the yr could not match October’s momentum and optimism, he stated.
The softer-than-expected September shopper worth index report, launched Friday, strengthened confidence within the Fed’s fee lower at its October assembly and doubtlessly at its December assembly, Kozlik stated.
“This inflation knowledge is a key purpose why the FOMC is prone to transfer decrease, supporting continued power in municipal demand,” he stated.
The VIX volatility index has remained under its 20-year common, signaling “unusually low market unpredictability,” which, in flip, has mirrored investor confidence and a extra steady danger atmosphere, each supportive of continued inflows, Kozlik stated.
The surge in muni mutual fund and exchange-traded fund inflows, which complete $45 billion year-to-date, has led to long-end power, stated Matt Fabian, president of Municipal Market Analytics.
“Funds have successfully repriced the lengthy finish that, for relative lack of institutional (and SMA) curiosity, had gapped out, widening the 2s/30s time period unfold to its highest since 1Q16,” Fabian stated, although he famous the current peak is just common, if sufficient historical past is reviewed.
“To the extent inflation is resetting greater (assuming local weather change is itself inflationary through [adoption] prices), steep time period spreads could also be required,” he stated.
Nonetheless, for now, Fabian stated “fund-driven shopping for” has rallied fund NAV efficiency, with most non-high-yield methods now seeing constructive returns year-to-date — an “important part” if inflows proceed.
Fund NAVs have additionally benefited from a current slowdown in provide — exterior of final week’s blockbuster pre-Fed week determine, he stated.
MMA now estimates this yr’s issuance shall be a report $561 billion. A earlier MMA report estimated provide this yr under $575 billion.
“Assuming that incremental issuance is being held again amid unprecedented headline dangers through the federal authorities, extra of what ought to have been issued this yr will wash into subsequent, moderately pushing full yr 2026 quantity projections above $600 billion,” Fabian stated.
As issuance “cools,” demand stays agency amid doubtless continued Fed fee cuts, Kozlik stated.
“For traders, the window of alternative remains to be open, however it could steadily slender as provide tightens within the remaining months of the yr,” he stated.
Within the major market Tuesday, BofA Securities priced for the Chicago Board of Schooling (/BB+//BBB-/) $1.095 billion of limitless tax GO refunding bonds. The primary tranche, $810.795 million of Collection 2025B, noticed 5.25s of 12/2027 at 4.33%, 5.25s of 2030 at 4.27%, 5.5s of 2035 at 4.70%, 5s of 2040 at 5.30% and 6s of 2044 at 5.54%, callable 12/1/2035.
The second tranche, $284.34 million of Collection 2025C, noticed 5.25s of 12/2027 at 4.33%, 5.25s of 2030 at 4.27%, 5.5s of 2035 at 4.70%, 6s of 2040 at 5.314% and 5.5s of 2045 at 5.70%, callable 12/1/2035.
BofA Securities priced for the Virginia Housing Growth Authority (Aaa/AAA//) $450 million of commonwealth mortgage bonds. The primary tranche, $75 million of non-AMT Collection E bonds, noticed all bonds worth at par: 2.9s of 1/2027, 3s of 1/2030, 3.05s of seven/2030, 3.6s of 1/2035, 3.65s of seven/2035, 4.15s of seven/2040, 4.6s of seven/2045, 4.8s of seven/2050 and 4.875s of seven/2056, callable 1/1/2034.
The second tranche, $150 million of taxable Collection F bonds, noticed all bonds worth at par: 3.6s of 1/2027, 3.185s of 1/2030, 3.865s of seven/2030, 4.737s of 1/2035, 4.787s of seven/2035, 5.337s of seven/2040, 5.552s of seven/2050 and 5.652s of seven/2056, callable 1/1/2034.
The third tranche, $225 million of non-AMT Collection G bonds, noticed 3.125s of seven/2056 worth at par, callable 2/1/2026.
Morgan Stanley priced for Clemson College, South Carolina, (Aa2//AA/) $174.4 million of upper training income bonds, Collection 2025A, with 5s of 5/2027 at 2.56%, 5s of 2030 at 2.53%, 5s of 2035 at 2.83%, 5s of 2040 at 3.42%, 5s of 2045 at 3.99%, 5s of 2050 at 4.28% and 5s of 2055 at 4.34%, callable 5/1/2035.
Jefferies priced for Broward County, Florida, (A1/A//) $132.765 million of AMT port amenities income bonds, Collection 2025, with 5s of 9/2026 at 3.18%, 5s of 2030 at 3.16%, 5s of 2035 at 3.51%, 5s of 2040 at 4.02%, 5.25s of 2045 at 4.49%, 5.5s of 2050 at 4.64% and 5.5s of 2055 at 4.68%, callable 9/1/2035.
Within the aggressive market, the Florida Division of Transportation (Aa2/AA/AA/) bought $240.97 million of Florida Turnpike income bonds, to BofA Securities, with 5s of seven/2026 at 2.66%, 5s of 2030 at 2.45%, 5s of 2035 at 2.79%, 5s of 2040 at 3.39%, 4.125s of 2045 at 4.23%, 4.375s of 2050 at par, and 4.25s of 2055 at 4.43%, callable 7/1/2035.
AAA scales
MMD’s scale was unchanged: 2.53% in 2026 and a couple of.44% in 2027. The five-year was 2.36%, the 10-year was 2.70% and the 30-year was 4.12% at 3 p.m.
The ICE AAA yield curve was little modified: 2.50% (unch) in 2026 and a couple of.42% (unch) in 2027. The five-year was at 2.39% (unch), the 10-year was at 2.73% (unch) and the 30-year was at 4.08% (-1) at 4 p.m.
The S&P International Market Intelligence municipal curve was little modified: The one-year was at 2.52% (unch) in 2025 and a couple of.44% (unch) in 2026. The five-year was at 2.36% (unch), the 10-year was at 2.71% (-1) and the 30-year yield was at 4.09% (unch) at 3 p.m.
Bloomberg BVAL was unchanged: 2.49% in 2025 and a couple of.44% in 2026. The five-year at 2.34%, the 10-year at 2.69% and the 30-year at 4.03% at 4 p.m.
Treasuries have been little modified.
The 2-year UST was yielding 3.487% (-1), the three-year was at 3.493% (flat), the five-year at 3.605% (flat), the 10-year at 3.997% (flat), the 20-year at 4.521% (-1) and the 30-year at 4.547% (-1) close to the shut.
Major to come back
The Allen Unbiased Faculty District, Texas, (Aaa/AAA//) is about to cost Thursday $209.94 million of PSF-insured limitless tax refunding bonds. FHN Monetary.
The Colorado Housing and Finance Authority (Aaa/AAA//) is about to cost $200.48 million of taxable single-family mortgage Class I bonds, 2025 Collection O-1. RBC Capital Markets.
The Harris County Cultural Schooling Amenities Finance Corp., Texas, (/AA//) is about to cost Wednesday $200 million of Houston Methodist income bonds, Collection 2025G. Jefferies.
The California Housing Finance Company is about to cost Wednesday $134.015 million of non-AMT sustainability inexpensive housing income bonds, 2025 Collection B. RBC Capital Markets.
The River Islands Public Financing Authority Enchancment Space No. 3, California, is about to cost $112.375 million of Group Amenities District No. 2023-1 particular tax bonds. HilltopSecurities.
Aggressive
Florence, South Carolina, (Aa2/AA-//) is about to promote $143.645 million of mixed waterworks and sewerage system capital enchancment income bonds, at 11 a.m. Jap Wednesday.
The Virginia Public Faculty Authority is about to promote $104.75 million of particular obligation faculty financing bonds at 10:45 a.m. Thursday.
