Municipal yields rise as markets flail over geopolitical turmoil

Municipal bonds saw losses across the curve Tuesday as a confluence of global and domestic policy uncertainties led to more U.S. Treasury market losses and one of the worst sessions for equities since in months.

Triple-A municipal yields rose up to seven basis points out long while USTs saw losses of up to eight basis points.

The two-year muni-UST ratio Tuesday was at 62%, the five-year at 59%, the 10-year at 62% and the 30-year at 87%, according to Municipal Market Data's 3 p.m. EDT read. The two-year muni-UST ratio was at 61%, the five-year at 59%, the 10-year at 64% and the 30-year at 88%, according to ICE Data Services.

The rates market is "on edge" as global fiscal and geopolitical pressures collide, said James Pruskowski, managing director at Hennion & Walsh.

"Rising U.S.?Europe tensions surrounding Greenland are reviving questions around foreign demand for U.S. assets, while policy uncertainty in Japan has sparked a sharp selloff in long-dated Japanese Government Bonds, adding pressure across global duration," he said.

These developments caused global government bond and equity prices to fall sharply overnight and the losses continued throughout the trading session.

Treasuries "broke higher from a very narrow range, forcing a broader repricing that spilled over into municipals," Pruskowski said.

Munis felt it more simply because the asset class had been performing so well, he noted. Valuations have tightened quickly in 2026, leaving "little cushion" when rates move like they are today, Pruskowski said.

"There's just been weakness in the overall Treasury market and municipals are kind of feeling it as well, and it's affecting the long end of Treasuries much more than it's affecting the front end," said Chris Brigati, managing director and CIO at SWBC. "And that is kind of being mirrored quite directly in the municipal market."

The market continues to contend with other external factors as well, but until this weekend, there was "surprisingly" little volatility, said Peter Delahunt, managing director and head of the municipal bond department at StoneX (SNEX).

Examples include Federal Reserve Chairman Jerome Powell being investigated by the Department of Justice, the Supreme Court's pending decision on tariffs, the United States' capture of Venezuelan leader Nicol?s Maduro, the rebellion in Iran, the protests in Minneapolis, ongoing situations in Gaza, and the Ukraine-Russia war, he said.

"All those things in the past, on their own, would have added volatility to the market, and yet you didn't see any of that until this weekend," Delahunt said.

For the remainder of the week, he noted, overseas developments and supply/demand dynamics may have the greatest impact on markets, Brigati said.

This week is a blackout period with the Federal Open Market Committee meeting, and the only "real" data release is personal consumption expenditures from the October/November period. For the latter, the data is old enough that it's already been absorbed into the market, he noted.

AAA scales
MMD's scale was cut two to seven basis points: 2.22% (+2) in 2027 and 2.22% (+2) in 2028. The five-year was 2.29% (+5), the 10-year was 2.68% (+5) and the 30-year was 4.28% (+7) at 3 p.m.

The ICE AAA yield curve was cut one to seven basis points: 2.23% (+1) in 2027 and 2.21% (+2) in 2028. The five-year was at 2.26% (+3), the 10-year was at 2.69% (+4) and the 30-year was at 4.23% (+7) at 4 p.m.

The S&P Global Market Intelligence municipal curve was cut: The one-year was at 2.25% (+2) in 2027 and 2.23% (+1) in 2028. The five-year was at 2.30% (+4), the 10-year was at 2.70% (+4) and the 30-year yield was at 4.23% (+6) at 4 p.m.

Bloomberg BVAL was cut: 2.28% (+3) in 2027 and 2.25% (+3) in 2028. The five-year at 2.25% (+4), the 10-year at 2.64% (+7) and the 30-year at 4.16% (+7) at 4 p.m.

Treasuries saw losses.

The two-year UST was yielding 3.597% (flat), the five-year at 3.856% (+3), the 10-year at 4.291% (+6), the 20-year at 4.876% (+8) and the 30-year at 4.918% (+8) at the close.

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.