Munis steady as new-issue calendar falls to $3.6B

Munis were steady Friday ahead of a smaller new-issue calendar as U.S. Treasuries were flat and equities ended mixed.

The two-year muni-UST ratio Friday was at 61%, the five-year at 59%, the 10-year at 63% and the 30-year at 89%, according to Municipal Market Data's 3 p.m. EDT read. The two-year muni-UST ratio was at 61%, the five-year at 58%, the 10-year at 63% and the 30-year at 87%, according to ICE Data Services.

"While tax-exempts lagged most other fixed-income classes last year, especially through the first six months of 2025, they have performed well in January, partially due to their relative cheapness compared with other fixed-income asset classes at the start of 2026," said Barclays (BCS) strategists led by Mikhail Foux.

That is why munis were the best-performing U.S. fixed-income asset class through the first three weeks of January, but the strong performance has created some problems, they noted.

For one, "when tax-exempts became richer rather quickly, some investors took a step back, and now, as we saw this week, municipals have become more prone to rate volatility," they said.

In just over a week, UST yields reached their highest levels since early 2025, rising nearly 10 basis points, Barclays (BCS) strategists noted.

Meanwhile, the "continued ascent" of Japanese Government Bond yields has become a concern, which "puts additional pressure on tax-exempts, especially on longer-dated securities," they said.

The muni selloff ? which saw yields rise up to seven basis points out long on Tuesday ? was "short-lived," as rates stabilized and tax-exempt issuance continues to be "manageable," Barclays (BCS) strategists said.

"However, this week has shown that after appearing bullet-proof for a period of time, tax-exempts have become much more vulnerable, especially the long end, with the yield curve continuing to steepen," they said.

Additionally, lower-rated names have lagged the rally, with BBBs and high-yield underperforming their high-quality counterparts by a "sizable margin," Barclays (BCS) strategists said.

However, the January effect has not been "canceled" this week for munis, they said.

"Until rate volatility returns along with heavy supply, we would not be overly concerned about tax-exempts, and they could continue to move sideways. Although they could remain relatively rich for some time, we believe that their upside is capped and would not chase the market here," Barclays (BCS) said.

New-issue calendar
The new-issue calendar is an estimated $3.56 billion, with $2.166 billion of negotiated deals on tap and $1.395 billion of competitives.

The Florida Development Finance Corp. leads the negotiated market with $369.295 million of healthcare facilities revenue bonds.

The competitive calendar is led by the Triborough Bridge and Tunnel Authority with $750 million of payroll mobility tax bond anticipation notes in two series.

AAA scales
MMD's scale was little changed: 2.21% (unch) in 2027 and 2.21% (unch) in 2028. The five-year was 2.28% (unch), the 10-year was 2.66% (-1) and the 30-year was 4.29% (unch) at 3 p.m.

The ICE AAA yield curve was bumped up to a basis point: 2.21% (unch) in 2027 and 2.21% (unch) in 2028. The five-year was at 2.25% (-1), the 10-year was at 2.69% (-1) and the 30-year was at 4.23% (-1) at 4 p.m.

The S&P Global Market Intelligence municipal curve was little changed: The one-year was at 2.22% (-1) in 2027 and 2.22% (-1) in 2028. The five-year was at 2.29% (-1), the 10-year was at 2.70% (unch) and the 30-year yield was at 4.24% (unch) at 3 p.m.

Bloomberg BVAL was little changed: 2.25% (-1) in 2027 and 2.23% (-1) in 2028. The five-year at 2.24% (-1), the 10-year at 2.64% (unch) and the 30-year at 4.17% (unch) at 4 p.m.

Treasuries were flat.

The two-year UST was yielding 3.597% (-1), the three-year was at 3.669% (-1) the five-year at 3.834% (-1), the 10-year at 4.233% (-1), the 20-year at 4.791% (-1) and the 30-year at 4.83% (-1) near the close.

Primary to come
The Florida Development Finance Corp. (/A-/A/) is set to price Tuesday $369.295 million of healthcare facilities revenue bonds (Tampa General Hospital Project), consisting of $285.33 million of Series 2026A and $83.965 million of 2026B. J.P. Morgan.

The Connecticut Housing Finance Authority (Aaa/AAA//) is set to price Tuesday $289.76 million of social housing mortgage finance program bonds, consisting of $20 million of 2026 Subseries A-1 bonds and $269.76 million of taxable 2026 Subseries A-2 bonds. RBC Capital Markets.

The Miami-Dade County Industrial Development Authority is set to price Tuesday $245.99 million of student housing revenue bonds (PRG - Casa Properties LLC Project), consisting of $230.11 million of Series 26A-1 bonds (/BB+//), $1.485 million of Series 26A-2 bonds (/BB+//) and $14.395 million of Series 26B (nonrated). KeyBanc Capital Markets.

Yonkers, New York, is set to price Tuesday a $176.7 million deal, consisting of $87.355 million of Series 2026A GO serial bonds (A2/A+//), $25.27 million of Series 2026B school serial bonds (Aa3/A+//), $7.045 million of Series 2026C taxable GOs (A2/A+//) and $57.03 million of Series 2026D GO refunding bonds (A2/A+//). Raymond James.

The Maine State Housing Authority (Aa1/AA+//) is set to price Tuesday $107.11 million of social mortgage purchase bonds, 2026 Series A. BofA Securities.

The Public Finance Authority is set to price Thursday $100 million of AMT revenue bonds (Sky Harbour Capital III LLC Aviation Facilities Project). Barclays (BCS).

Competitive
Triborough Bridge and Tunnel Authority is set to sell $300 million of payroll mobility tax bond anticipation notes, Subseries 2026A-1, at 10:15 a.m. Eastern Thursday, and $450 million of payroll mobility tax bond anticipation notes, Subseries 2026A-2, at 11:45 a.m. Thursday.

The Milwaukee Metropolitan Sewerage District, Wisconsin, (Aa1/AA+/AAA/) is set to sell $112 million of GO sewerage system bonds, Series 2026A, at noon Monday.