Munis little changed ahead of $10B new-issue calendar

Municipals were little changed Friday ahead of a $10 billion new-issue calendar. U.S. Treasuries were weaker and equities ended up.

The two-year muni-UST ratio Friday was at 68%, the five-year at 65%, the 10-year at 67% and the 30-year at 88%, according to Municipal Market Data's 3 p.m. EDT read. ICE Data Services had the two-year at 69%, the five-year at 65%, the 10-year at 67% and the 30-year at 88% at a 4 p.m. read.

The tax-exempt muni market has performed "exceptionally well" so far this week, outperforming USTs despite the surge of $16 billion in tax-exempt issuance, the third-highest week this year, said J.P. Morgan strategists led by Peter DeGroot.

Investors absorbed the "sizable calendar with the help of first half of December reinvestment capital of $24 billion and a tailwind from fund inflows, which are now up to $2.4 billion over the past seven sessions," they said.

With next week's manageable tax-exempt supply and a well-capitalized investor base, munis "should perform well given range-bound-to-lower UST rates, while tax-exempts are largely trading at fair-value versus taxable fixed-income," J.P. Morgan strategists said.

Supply will slow toward the end of the year, with some $10 billion weeks between now and yearend, said Ben Barber, director of municipal bonds at Franklin Templeton.

"So it should be pretty calm in terms of things that could potentially happen toward yearend," he said.

On the demand side, things remain positive across all "formats" ? whether open-end mutual funds, exchange-traded funds or separately managed accounts ? as demand has kept pace with the record-breaking supply, according to Barber.

The secondary market is "tough," especially as "you go down the credit spectrum," in part because of overwhelming supply, he said.

It's also possible that redemptions from open-end mutual funds drive secondary market trades, Barber said.

If so, "then your next biggest competitor down the street is going to put a penalty on those bonds to buy them," he noted.

Usually, around this time of year there is a spike in tax loss harvesting, but this year, there is not much tax loss harvesting to be done, Barber said.

In April, "we had a little swoon and so a lot of people did individual tax loss harvesting within their funds. You didn't see shareholders come in, though, and start redeeming funds in a big way. April was too fast," he said.

There will not be that much tax loss harvesting this year unless there is a massive sell-off in the next week or two, though that's unlikely, Barber said.

Creditwise, outside of the headlines around "Brightline in Florida or Brightline West," there does not appear to be anything "big and lurking," he said.

As for any other potential surprises, there does not appear to be anything at the legislative or election level between now and yearend, Barber said.

New-issue calendar
The new-issue calendar falls to an estimated $9.998 billion, with $9.255 billion of negotiated deals on tap and $743 million of competitives.

The University of California leads the negotiated calendar with $2 billion of general revenue bonds.

The competitive calendar is led by the Blue Valley Unified School District No. 229, Kansas, with $101.25 million of general obligation bonds.

AAA scales
MMD's scale was unchanged: 2.48% in 2026 and 2.43% in 2027. The five-year was 2.43%, the 10-year was 2.77% and the 30-year was 4.21% at 3 p.m.

The ICE AAA yield curve was cut up to a basis point: 2.49% (unch) in 2026 and 2.46% (unch) in 2027. The five-year was at 2.40% (+1), the 10-year was at 2.77% (+1) and the 30-year was at 4.17% (+1) at 4 p.m.

The S&P Global Market Intelligence municipal curve was little changed: The one-year was at 2.48% (-1) in 2025 and 2.43% (unch) in 2026. The five-year was at 2.43% (unch), the 10-year was at 2.77% (unch) and the 30-year yield was at 4.19% (unch) at 3 p.m.

Bloomberg BVAL was little changed 2.50% (unch) in 2025 and 2.45% (unch) in 2026. The five-year at 2.39% (unch), the 10-year at 2.74% (unch) and the 30-year at 4.10% (+1) at 4 p.m.

Treasuries were weaker.

The two-year UST was yielding 3.561% (+4), the three-year was at 3.586% (+4), the five-year at 3.712% (+4), the 10-year at 4.136% (+4), the 20-year at 4.754% (+4) and the 30-year at 4.79% (+4) near the close.

Primary to come
The Regents of the University of California (Aa2/AA/AA/) is set to price Tuesday $2 billion of general revenue bonds, Series 2025CD. Jefferies.

Chicago (/A+/A+/A+/) is set to price Tuesday $972.18 million of Chicago O'Hare International Airport revenue bonds, consisting of $466.88 million of Series 2025C and $505.3 million of 2025D. J.P. Morgan.

The Alabama Highway Authority (Aa2///) is set to price Thursday $730 million of special obligation revenue bonds. J.P. Morgan.

The Wisconsin Health and Educational Facilities Authority is set to price Thursday $627.885 million of Mercy Health Corp. refunding revenue bonds, consisting of $126.35 million of Series 2025A, $401.535 million of Series 2026A, $100 million of Series 2026B and $100 million of Series 2026C. Ziegler.

The New York City Housing Development Corp. (Aa2/AA+//) is set to price Tuesday $535.93 million of non-AMT sustainable development multi-family housing revenue bonds, consisting of $150 million of Series 2026A-1 and $385.93 million of Series 2026A-2. Jefferies.

The corporation is also set to price Tuesday $225 million of taxable sustainability development multi-family housing revenue bonds, Series 2025H-1. RBC Capital Markets.

Additionally, the corporation is set to price Monday $196.83 million of taxable sustainability development multi-family housing revenue bonds, Series 2025H-2. Raymond James.

The Virgin Islands Hotel Development Financing Corp. is set to price Wednesday $448.73 million of Frenchman's Reef Hotel Acquisition project hotel revenue bonds, consisting of $272.49 million of Senior Lien Series 2025A-1 senior lien bonds, $12 million of Taxable Senior Lien Series 2025A-2 and $164.24 million of Subordinate Lien Series 2025B. Piper Sandler (PIPR).

The Texas A&M University System Board of Regents of the (Aaa/AAA/AAA/) is set to price Tuesday $277.395 million of revenue financing system bonds, consisting of $222.25 million Series 2025A bonds and $55.145 million of taxable Series 2025B bonds. Wells Fargo (WFC).

The Public Finance Authority is set to price Thursday $248.925 million of Tech Tower project multifamily housing revenue bonds, consisting of $202.45 million of Series 2025A, $3.085 million of Series 2025T and $43.39 million of Series 2025B. D.A. Davidson.

Ohio (Aaa/AAA/AAA/) is set to price Tuesday $244.475 million of GO refunding bonds, consisting of $200.185 million of Series 2025B common school bonds and $44.29 million of Series 2025B infrastructure improvement bonds. Jefferies.

The Maryland Stadium Authority (/AA/AA/) is set to price Tuesday $241.625 million of taxable Pimlico Improvements project revenue bonds. BofA Securities.

The Humble Independent School District is set to price Tuesday a $229.75 million deal, consisting of $184.095 million of PSF-insured Series 2026A unlimited tax school building and refunding bonds (Aaa/AAA//) and $45.655 million of non-PSF-insured Series 2026B unlimited tax refunding bonds (Aa1/AA//). RBC Capital Markets.

The MIDA Mountain Village Public Infrastructure District is set to price Thursday $125.205 million of tax allocation revenue bonds, consisting of $101.5 million of Series 2025-1 bonds and $23.705 million of Series 2025-2 convertible capital appreciation bonds. Stifel, Nicolaus & Co.

The Aurora Crossroads Metropolitan District No. 2, Colorado, is set to price Tuesday $120.658 million of GO limited tax bonds, consisting of $50.287 million of convertible capital appreciation refunding bonds, Series 2025A-1; $18.236 million of convertible capital appreciation refunding bonds, Series 2025A-2; and $51.135 million of bonds, Series 2025A-3. Piper Sandler (PIPR).

The Illinois Finance Authority (//BBB-/) is set to price Tuesday $105.57 million of The Moorings of Arlington Heights refunding revenue bonds, consisting of $66.09 million of Series 2025A, $16.28 million of Series 2025B-1 and $23.3 million of Series 2025B-2. Ziegler.

Competitive
The Blue Valley Unified School District No. 229, Kansas, (Aaa///) is set to sell $101.25 million of GO school bonds, Series 2025-A, at 11:30 a.m., Eastern Monday.