Munis see small gains on front end, belly of curve

Munis richened slightly in the front end and belly of the yield curve, while U.S. Treasuries saw losses on Friday.

The two-year muni-UST ratio Friday was at 61%, the five-year at 58%, the 10-year at 62% and the 30-year at 87%, according to Municipal Market Data's 3 p.m. EDT read. ICE Data Services had the two-year at 61%, the five-year at 59%, the 10-year at 64% and the 30-year at 87% at a 3 p.m. read.

In the past, several Januarys started off with a "real whimper" or negative. However, this January seems to be "pretty tame" and in a solidly positive direction, said Elaine Brennan, executive director of the public finance department at Roosevelt & Cross.

Inflows into muni mutual funds are a big part of the story, she noted.

Muni mutual funds have seen sizable inflows to start 2026. A year and a half ago, there were months and months of outflows, Brennan said.

"It was like torture. Where's all this money going? Now we've switched that cycle back and as long as we see strong inflows, it's going to hold the market," she said.

Tax-exempts took a bit of a "pause" this week after getting off to a solid start last week, but did not give back any ground, said Barclays (BCS) strategists led by Mikhail Foux.

"We did not think that a relative lull in issuance would persist and the tax-exempt 30-day visible pipeline has quickly swelled to the highest level since early December," they said.

Supply has become solid ? with next week's issuance at $10.8 billion, per LSEG ? but remains "manageable" at these levels, Barclays (BCS) strategists said.

Both the investment-grade and high-yield indices are up nearly 1% month-to-date.

"Some of the laggards of last year did well early in 2026: high grade, low coupon debt has led the charge, in addition to the 15-year part of the index curve that seems to be popular with investors these days; in high yield, Puerto Rico and MSA Tobacco have done well so far," Barclays (BCS) strategists said.

It feels like separately managed accounts, mutual fund and hedge fund investors have "a good deal of cash to put to work but are unlikely to be in a hurry, in our view, as valuations have become rich in the front-end and the belly of the yield curve," they said

Meanwhile, Barclays (BCS) strategists expect a "good deal of supply" to come to market down the line, possibly accompanied by rate volatility.

"Hence, we believe that there is no need to rush and put money to work right away ? there should be plenty of opportunities down the line, and investors should wait for a better entry point," they said.

New-issue calendar
The new-issue calendar is an estimated $10.836 billion, with $6.979 billion of negotiated deals on tap and $3.857 billion of competitives.

The New York City Municipal Water Finance Authority leads the negotiated calendar with $800 million of water and sewer system second general resolution revenue bonds.

The competitive calendar is led by Pennsylvania with $1.75 billion of GOs in three series.

AAA scales
MMD's scale was bumped 20 years and in: 2.20% (-2) in 2027 and 2.20% (-2) in 2028. The five-year was 2.24% (-3), the 10-year was 2.63% (-2) and the 30-year was 4.21% (unch) at 3 p.m.

The ICE AAA yield curve was little changed: 2.22% (-1) in 2027 and 2.19% (-1) in 2028. The five-year was at 2.22% (unch), the 10-year was at 2.65% (unch) and the 30-year was at 4.17% (+1) at 3 p.m.

The S&P Global Market Intelligence municipal curve was bumped up to a basis point: The one-year was at 2.23% (-1) in 2027 and 2.12% (-1) in 2028. The five-year was at 2.26% (-1), the 10-year was at 2.66% (-1) and the 30-year yield was at 4.17% (-1) at 3 p.m.

Bloomberg BVAL was bumped up to two basis points: 2.25% (-1) in 2027 and 2.22% (-1) in 2028. The five-year at 2.21% (-2), the 10-year at 2.57% (-1) and the 30-year at 4.08% (unch) at 3 p.m.

Treasuries saw losses.

The two-year UST was yielding 3.596% (+3), the three-year was at 3.663% (+5), the five-year at 3.821% (+5), the 10-year at 4.226% (+6), the 20-year at 4.788% (+4) and the 30-year at 4.836% (+4) at 3:15 p.m.

Primary to come
The New York City Municipal Water Finance Authority (Aa1/AA+/AA+/) is set to price Wednesday $800 million of water and sewer system second general resolution revenue bonds, Fiscal Series 2026BB. Loop Capital Markets.

The Maryland Health and Higher Educational Facilities Authority (A2/A//) is set to price Wednesday $734.715 million of revenue bonds (MedStar Health issue), consisting of $552.98 million of Series 2026A and $181.735 million of Series 2026B. J.P. Morgan.

The Massachusetts Development Finance Agency (Aa3/AA-//) is set to price Tuesday $720.78 million of revenue bonds (Mass General Brigham issue), consisting of $575 million of Series 2026F bonds and $145 million of Series 2026H forward-delivery bonds. J.P. Morgan.

The Massachusetts Clean Water Trust (Aaa/AAA/AAA/) is set to price Thursday $705.595 million of green state revolving fund bonds, Series 27. Morgan Stanley (MS).

The Connecticut Health and Educational Facilities Authority (/A/A+/) is set to price Wednesday $683.265 million of revenue bonds (Hartford Healthcare issue), Series 2026A. Morgan Stanley (MS).

The San Antonio Electric and Gas Systems (Aa3/A+/AA-/) is set to price Wednesday $667.205 million of variable rate junior lien revenue refunding bonds, Series 2026A. RBC Capital Markets.

The Los Angeles Department of Water and Power (Aa2//AA-/AA/) is set to price Thursday $544.325 million of power system revenue bonds, Series 2025D. Siebert Williams.

The Delaware Health Facilities Authority (Aa2/AA//) is set to price Thursday $332.62 million of revenue bonds (Christiana Care Health System), Series 2026. J.P. Morgan.

Ohio (Aaa/AAA/AAA/AAA) is set to price Wednesday $325.545 million of GO highway capital improvements bonds, consisting of $255.505 million of Series Z bonds and $70.04 million of Series AA refunding bonds. Huntington Securities.

The New York City Housing Development Corp. (Aa2///) is set to price Wednesday $197.33 million of non-AMT sustainable development multi-family housing revenue bonds, consisting of $136.47 million of Series B bonds and $60.86 million of Series C bonds. Wells Fargo (WFC).

The corporation is also set to price Wednesday $152.775 million of Series D non-AMT sustainable development refunding multi-family housing revenue bonds. Barclays (BCS).

Hays County, Texas, (/AA+/AA+/) is set to price Thursday a $134.715 million deal, consisting of $100 million of combination tax and revenue certificates of obligation and $34.715 million of limited tax refunding bonds. Jefferies.

The Allegheny County Higher Education Building Authority, Pennsylvania, (A2/A//) is set to price Tuesday $129.465 million of university revenue refunding bonds (Duquesne University). RBC Capital Markets.

The Rhode Island Health Educational Building Corp. (/BBB+/BBB+/) is set to price Thursday $126.5 million of hospital financing revenue bonds (Brown University Health Obligated Group issue), Series 2026B. Morgan Stanley (MS).

The South Dakota Health and Educational Facilities Authority (A1//AA-/) is set to price Wednesday $121.9 million of revenue bonds (Monument Health. Piper Sandler (PIPR).

Brown University Health (/AA/BBB+/) is set to price Thursday $101.775 million of taxable bonds, Series 2026A. Morgan Stanley (MS).

Competitive
Pennsylvania (Aa2/A+/AA/) is set to sell $180.760 million of GO refunding bonds, First Refunding Series of 2026 (Bid Group A), at 10 a.m., Eastern, on Wednesday; $775 million of GOs, First Series of 2026 (Bid Group B), at 10:30 a.m. on Wednesday; and $795 million of GO bonds, First Series of 2026 (Bid Group C), at 11 a.m. on Wednesday.

Wisconsin is set to sell $480.26 million of GO bonds of 2026, Series A, at 10:45 a.m. Tuesday.

Fairfax County, Virginia, (Aaa//AAA/) is set to sell $376.845 million of public improvement bonds, Series 2026A, at 10:30 a.m. Wednesday.

The Metropolitan Council, Minnesota, (Aaa/AAA//) is set to sell $323.560 million of GO wastewater revenue and refunding bonds, Series 2026A, at 11:30 a.m. Tuesday.

Greenwich, Connecticut, is set to sell $140 million of GO bond anticipation notes, at 11:30 a.m. Thursday.

Beaufort County School District, South Carolina, (Aa1/AA//) is set to sell $125 million of GOs, Series 2026A, at 10:30 a.m. Tuesday.