Munis, USTs extend selloff

Municipals saw further weakness Monday following more losses in U.S. Treasuries while equities ended down as investors digest rising oil prices amid geopolitical tensions and uncertain macroeconomic data ahead.

Muni yields were cut up two to five basis points, depending on the curve, while UST yields rose five to seven basis points, pushing the 10-year UST yields above 4% the first time since August.

A hotter-than-expected jobs report on Friday pushed yields higher for the week as market participants now expect a 25-basis point rate cut at the Fed's next meeting instead of a 50-basis point one, said Jason Wong, vice president of municipals at AmeriVet Securities.

Munis have outperformed the larger losses in USTs, leading to a richer muni-UST ratio environment.

The two-year muni-to-Treasury ratio Monday was at 59%, the three-year at 60%, the five-year at 61%, the 10-year at 65% and the 30-year at 83%, according to Refinitiv Municipal Market Data's 3 p.m. EST read. ICE Data Services had the two-year at 62%, the three-year at 62%, the five-year at 62%, the 10-year at 67% and the 30-year at 84% at 4 p.m.

The two-year ratio has richened by 2.25 percentage points since the first rate cut in September, while the five- and 10-year ratios have richened by 4.1 and 3.5 percentage points, respectively, Wong said.

The 30-year ratio has "moved in favor" of munis by 3.1 percentage points, he said.

Despite another outsized new-issue calendar where supply topped $10 billion, "strong demand coming from the Oct. 1 reinvestment cash as well as another week of heavy fund inflows helped spark the ratio tightening," Birch Creek strategists said.

Muni mutual funds saw inflows of around $1.9 billion, the largest weekly inflow figure year-to-date, according to LSEG Lipper. This marked 14 straight weeks of inflows as "investors continue to pour into muni bond funds to grab higher yields before the Fed makes a decision to cut rates any further this year," Wong said.

Birch Creek strategists said customer sale lists were lighter than usual last week, with bonds 20 years and out seeing the biggest drop.

"On the flip side, purchases jumped over 20% in that part of the curve especially as the largest deals [last] week were not the typical ultra-high-grades with supersized term bonds but instead were heavily concentrated in A-rated and Prepay Gas credits," they said.

Issuance remains sizable this week as volume is estimated at $9.565 billion, led $1.5 billion of taxable GOs from New York City and $935 million of GOs from Connecticut.

Volume will remain robust through the election, with several large deals already on the calendar in the coming weeks. Bond Buyer 30-day visible supply sits at $17.37 billion.

The New Jersey Transportation Trust Fund Authority is set to price the week of Oct. 14 a $2.7 billion deal, consisting of $1.2 billion of 2024 program bonds and at least $1.5 billion of system bonds.

The Metropolitan Government of Nashville and Davidson is set to sell Oct. 16 $787 million of GO improvement bonds in three series.

The New York Transportation Development Corp. is set to price the week of Oct. 21 $1.5 billion of non-AMT and AMT John F. Kennedy International Airport Terminal 6 special facilities refunding bonds.

The New York City Transitional Finance Authority is set to price the week of Oct. 21 $1.5 billion of future tax subordinate bonds.

AAA scales
Refinitiv MMD's scale was cut two to five basis points: The one-year was at 2.64% (+4) and 2.40% (+4) in two years. The five-year was at 2.38% (+3), the 10-year at 2.67% (+5) and the 30-year at 3.60% (+3) at 3 p.m.

The ICE AAA yield curve was cut three to five basis points: 2.70% (+3) in 2025 and 2.44% (+4) in 2026. The five-year was at 2.38% (+4), the 10-year was at 2.66% (+4) and the 30-year was at 3.56% (+3) at 4 p.m.

The S&P Global Market Intelligence municipal curve was cut three to four basis points: The one-year was at 2.67% (+4) in 2025 and 2.40% (+4) in 2026. The five-year was at 2.36% (+3), the 10-year was at 2.65% (+3) and the 30-year yield was at 3.56% (+3) at 3 p.m.

Bloomberg BVAL was cut three to four basis points: 2.69% (+4) in 2025 and 2.44% (+3) in 2026. The five-year at 2.39% (+3), the 10-year at 2.65% (+4) and the 30-year at 3.57% (+4) at 4 p.m.

Treasuries were weaker.

The two-year UST was yielding 3.992% (+7), the three-year was at 3.890% (+6), the five-year at 3.863% (+5), the 10-year at 4.025% (+6), the 20-year at 4.374% (+5) and the 30-year at 4.303% (+5) just before the close.

Primary to come
New York City (Aa2/AA/AA/AA+) is set to price Wednesday $1.5 billion of taxable GOs, Fiscal 2025 Series D, consisting of $820 million of social Subseries D-1 bonds, terms 2049, 2054; and $680 million of Subseries D-2 bonds, serials 2026-2044. BofA Securities.

Connecticut (Aa3/AA-/AA-/AA+) is set to price Wednesday $935 million of GOs, consisting of $560 million of Series F bonds, serials 2025-2038; $240 million of social Series G bonds, serials 2039-2044; and $135 million of refunding Series H bonds, serials 2025-2034. Siebert Williams Shank.

The Philadelphia Authority for Industrial Development (Aa2/AA//) is set to price Tuesday $550 million of Children's Hospital of Philadelphia Project hospital revenue bonds, Series A of 2024. J.P. Morgan.

The Maryland Stadium Authority (Aa2/AA//) is set to price Tuesday $413.41 million of Build to Learn revenue bonds, serials 2026-2044, terms 2049, 2054. BofA Securities.

The New York State Housing Finance Agency (Aa1///) is set to price Wednesday $259.99 million of state personal income tax sustainability revenue bonds, consisting of $7.975 million of 2024 Series A-1 and $185.015 million of 2024 Series A-2. Jefferies.

The Cabarrus County Development Corp., North Carolina, (Aa1/AA+/AA+/AA+) is set to price Thursday $238.305 million of limited obligation refunding bonds, serials 2025-2044. BofA Securities.

The Georgia Housing and Finance Authority (/AAA//) is set to price Tuesday $203.6 million of single-family mortgage non-AMT revenue bonds. Morgan Stanley (MS).

The East Baton Rouge Parish Capital Improvement District (Aa2/AA+//) is set to price Tuesday $199.44 million of MOVEBR sales tax revenue bonds, serials 2025-2048. Stifel.

The Pasco County School Distrcit, Florida, (Aa3//AA/) is set to price Tuesday $197.195 million of sales tax revenue bonds, serials 2025-2039. BofA Securities.

The Aldine Independent School District, Texas, (Aaa/AAA//) is set to price Wednesday $183.74 million of PSF-insured unlimited tax school building and refunding bonds, Series 2024B. Cabrera Capital Markets.

The Ohio Higher Educational Facility Commission (Baa1//A-/) is set to price Wednesday $180.935 million of Xavier University 2024 Project higher educational facility revenue refunding bonds, serials 2025-2042, terms 2049, 2054. RBC Capital Markets.

The Colorado Housing and Finance Authority (Aaa/AAA//) is set to price Tuesday $163 million of taxable single-family mortgage Class I bonds, 2024 Series G-1, serials 2026-2034, terms 2036, 2039, 2044, 2050. RBC Capital Markets.

The Hampton Roads Transportation Accountability Commission (Aa1/AA//) is set to price Tuesday $152.73 million of Hampton Roads Transportation Fund senior lien revenue bonds, Series 2024A, serials 2030-2044, terms 2049, 2054, 2059, 2064. BofA Securities.

Orlando, Florida, (/AAA/AAA/) is set to price Wednesday $149.27 million of water reclamation system revenue bonds, consisting of $132.18 million of improvement bonds, Series 2024A, serials 2025-2054; and $17.09 million of refunding bonds, Series 2024B, serials 2025-2032. BofA Securities.

The Mississippi Home Corp. (Aaa///) is set to price Tuesday $125.815 million of single-family mortgage revenue bonds, consisting of $96.835 million of non-AMT bonds, Series 2024E, serials 2029-2036, terms 2039, 2044, 2049, 2054; and $28.98 million of taxables, Series 2024F, serials 2025-2029, term 2054. Wells Fargo (WFC).

The Arizona Board of Regents (Aa3/A+//) is set to price Wednesday $115.2 million of BAM-insured University of Arizona SPEED revenue refunding bonds. Morgan Stanley (MS).

The California Municipal Finance Authority is set to price Tuesday $112.135 million of PRS California Obligated Group Projects revenue and refunding bonds, consisting of $88.085 million of Series 2024A, $9 million of Series 2024B-1 and $15.05 million of Series 2024B-2. Ziegler.

The Metropolitan Knoxville Airport Authority (A3/A//) is set to price $111.015 million of airport revenue bonds, consisting of $69.49 million of non-AMT bonds, Series 2024A, serials 2028-2044, terms 2049, 2054; and $41.525 million of taxables, Series 2024B, serials 2027-2039, terms 2044, 2054. BofA Securities.

Washington State University (Aa3/A+//) is set to price Tuesday $105.975 million of general revenue refunding delayed delivery bonds, serials 2027-2040. Barclays Capital.

Competitive:
New York State Thruway Authority (Aa3/A+//) is set to sell $521.75 million of general revenue refunding bonds at 11:15 a.m. eastern Tuesday.

Jersey City, New Jersey, is set to sell $181.45 million of bond anticipation notes, at 11 a.m. Tuesday.

Washoe County, Nevada, (Aa3/AA//) is set to sell $110.515 million of general obligation bonds at 10:45 a.m. Tuesday.

Clark County School District, Nevada, (A1/AA-//) is set to sell $400 million of limited tax general obligation bonds at 11:30 a.m. eastern Thursday.