PrintBond markets quiet to start the week
BY SourceMedia | MUNICIPAL | 04:10 PM ESTMunis were steady Monday as U.S. Treasuries were little changed and equities ended up.
The two-year muni-UST ratio Monday was at 61%, the five-year at 58%, the 10-year at 62% 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 60%, the five-year at 57%, the 10-year at 62% and the 30-year at 87%, according to ICE Data Services.
This week's expected elevated $12.6 billion in supply "coincides with a recent uptick in secondary offerings ? and may skim some froth from the market, particularly where spreads have hit one-year tights," said J.P. Morgan strategists led by Peter DeGroot.
The magnitude of deal concessions is expected to "hinge on the rates market and follow through to [exchange-traded fund] flows, particularly given last week's bout of ETF outflows," they said.
This places "added emphasis" on this week's January nonfarm payroll report, as weaker labor market data partially led to the recent rate market rally, with retail sales and consumer price index releases also on tap, J.P. Morgan strategists said.
Last week, the muni market extended its strong start to 2026, Birch Creek strategists.
The AAA MMD curve kept steepening, with the front end bumped as much as seven basis points while the 30-year was unchanged, they said.
Bids wanteds rose 17% compared to the rolling five-week average, while customer purchases increased 32%, Birch Creek strategists said, citing J.P. Morgan data.
"Most of the front-end demand came from [separately managed accounts] and retail accounts flush with Feb. 1 reinvestment cash, despite ratios in the high 50s to low 60s percentile," they said.
Mutual funds are also supportive, though with a "more measured approach," Birch Creek strategists said.
With this week's elevated new-issue calendar mostly made up of high-grade deals, "funds have been patient to wait for better entry points and are reluctant to push the market further given how tight valuations are," they said.
However, cash piles are "swelling." LSEG Lipper reported the second straight week of $2 billion-plus of inflows, the first occurrence since February 2009, Birch Creek strategists said.
In the investment market, new issues did very well, with "the largest subscriptions coming in the 15-20y part of the curve, but term bonds also saw robust interest," they said.
A $533 million Chicago Transit Authority deal saw more than $5 billion in orders, Birch Creek strategists noted.
"With this level of interest in new issues, we expect the market will have no problem digesting the upcoming calendar, though investor preference clearly sits with spreadier high grades, typically plus-25 or wider," they said.
"The AA-plus and AAA names that trade close to the MMD scale will still likely need some concessions to spark heavy order flow," Birch Creek strategists said.
AAA scales
MMD's scale was little changed: 2.11% (unch) in 2027 and 2.11% (unch) in 2028. The five-year was 2.18% (unch), the 10-year was 2.60% (unch) and the 30-year was 4.31% (+2) at 3 p.m.
The ICE AAA yield curve was little changed: 2.13% (-1) in 2027 and 2.12% (unch) in 2028. The five-year was at 2.14% (unch), the 10-year was at 2.60% (unch) and the 30-year was at 4.22% (unch) at 4 p.m.
The S&P Global Market Intelligence municipal curve was little changed: The one-year was at 2.11% (unch) in 2027 and 2.12% (unch) in 2028. The five-year was at 2.19% (unch), the 10-year was at 2.60% (+1) and the 30-year yield was at 4.24% (unch) at 3 p.m.
Bloomberg BVAL was little changed: 2.13% (-1) in 2027 and 2.10% (unch) in 2028. The five-year at 2.16% (unch), the 10-year at 2.57% (unch) and the 30-year at 4.16% (+1) at 4 p.m.
U.S. Treasuries were little changed.
The two-year UST was yielding 3.486% (-1), the three-year was at 3.557% (-2), the five-year at 3.744% (-2), the 10-year at 4.201% (-1), the 20-year at 4.795% (flat) and the 30-year at 4.852% (flat) near the close.
Primary to come
The Harris County Cultural Education Facilities Finance Corp. (/AA/AA/) is set to price Tuesday $1.257 billion of revenue refunding bonds (Houston Methodist), Series 2026A. BofA Securities.
The District of Columbia (Aa1/AA+/AA+/) is set to price Tuesday $929.565 million of GOs, consisting of $387.535 million of Series 2026A bonds and $542.03 million of Series 2026B refunding bonds. Barclays
The California Department of Water Resources (Aa1/AA+//) is set to price Tuesday $552.745 million of Central Valley Project Water System revenue bonds, 2026 Series A. Barclays
Wisconsin is set to price Tuesday $550 million of GO refunding bonds, consisting of $450 million of Series 2026-1 bonds and $100 million of Series 2027-1 forward-delivery bonds. Wells Fargo
The California Municipal Finance Authority is set to price $383.576 million of Series 2026-1 municipal certificates, consisting of $327.957 million of Class A-1 bonds, $46.509 million of Class A-2 bonds and $9.11 million of subordinate Class B bonds. J.P. Morgan.
The Massachusetts Development Finance Agency (/BBB-//) is set to price Wednesday $372.74 million of revenue bonds (Middlesex Sustainable Energy, consisting of $165.01 million of tax-exempt Series A bonds and $207.73 million of taxable Series B bonds. BofA Securities.
The Arizona Board of Regents (Aa3/AA-//) is set to price Tuesday $231.43 million of University of Arizona System revenue refunding bonds, Series 2026A. J.P. Morgan.
The University of Oregon (Aa2/AA-//) is set to price Thursday $205.8 million of general revenue and refunding bonds, Series 2026A. BofA Securities.
Ohio (Aaa/AAA/AAA/) is set to price Tuesday $200 million of infrastructure improvement GOs, Series 2026 A. Stifel.
The Ontario Public Financing Authority, California, (/AA-/AA-/) is set to price Tuesday $196.34 million of lease revenue bonds, consisting of $161.405 million of taxable Series 2026A bonds and $34.935 million of tax-exempt 2026B bonds. Ramirez.
The Colorado Housing and Finance Authority (Aaa/AAA//) is set to price Wednesday $194.44 million of taxable single-family mortgage bonds, Class I bonds, 2026 Series C-1. RBC Capital Markets.
The Richardson Independent School District, Texas, (Aaa/AAA//) is set to price Thursday $183.105 million of PSF-insured unlimited tax refunding bonds. FHN Financial.
The Round Rock Independent School District, Texas, (Aaa///AAA/) is set to price Wednesday $180.225 million of PSF-insured unlimited tax school building bonds, Series 2026A. J.P. Morgan.
The Build NYC Resource Corp. (/BB//) is set to price Tuesday $167.915 million of tax-exempt revenue bonds (261 Walton Facility LLC?Zeta Charter Schools, Inc. Project), consisting of $81.075 million of Series 2026A and $86.84 million of Series 2026B. Baird.
The Public Finance Authority (Aa1///) is set to price Tuesday $136 million of municipal certificates, Series 2026-1 Class A. J.P. Morgan.
The Alvin Independent School District, Texas, (Aaa//AAA/) is set to price Tuesday $132.89 million of PSF-insured unlimited tax refunding bonds. SAMCO Capital Markets.
The Public Finance Authority (//A-/) Thursday $132.385 million of tax-exempt revenue bonds (Maniilaq Association Employee Housing Project). Goldman Sachs
The Unified Government of Wyandotte County/Kansas City, Kansas, is set to price Thursday $119.275 million of sales tax special obligation revenue bonds (Northwest Speedway Star Bond District Project). Piper Sandler
The Columbus City School District Board of Education (Aa1/AA+//) is set to price Wednesday $100.65 million of various purpose refunding bonds, Series 2026 A. Stifel.
Muscatine Power and Water, Iowa, (A1/AA//) is set to price Wednesday $100 million of electric revenue bonds, consisting of $90 million of Series 2026A bonds and $10 million of taxable Series 2026B bonds. Piper Sandler
Competitive
Washington (Aaa/AA+/AA+/) is set to sell $540.895 million of various purpose GOs, Series 2026C, Bid Group 2, at 10:45 a.m. Eastern Tuesday; $299.37 million of motor vehicle fuel tax and vehicle-related fees GOs, Series 2026D, at 11:45 a.m. Tuesday; $236.45 million of various purpose GOs, Series 2026C, Bid Group 1, at 10:15 a.m. Tuesday; and $221.235 million of taxable GOs, Series 2026T-2, at 11:15 a.m. on Tuesday.
The Las Vegas Valley Water District, Nevada, (Aa1/AA+//) is set to sell $343.31 million of GO water refunding bonds, Series 2026A, at 10:45 a.m. Wednesday.
Portland Public Schools, Oregon, (Aa1///) is set to sell $273.315 million of GOs, Bidding Group 3, at noon Tuesday; $232.37 million of GOs, Bidding Group 2, at 11:30 a.m. Tuesday; and $154.315 million of GOs, Bidding Group 1, at 11 a.m. on Tuesday.
Nevada (Aa1/AA+/AA+/) is set to sell $227.745 million of GO capital improvement, historic preservation and open space bonds, Series 2026A, at noon Tuesday; and $102.445 million of GO capital improvement bonds, Series 2026B, at 12:30 p.m. Tuesday.
Virginia Beach, Virginia, (Aaa/AAA/AAA/) is set to sell $146.425 million of GO public improvement bonds, Series 2026A, at 10:30 a.m. Thursday.
Danbury, Connecticut, is set to sell $139.605 million of GO bond anticipation notes at 11 a.m. Tuesday.
Memphis, Tennessee, (Aa2/AA//) is set to sell $137.705 million of general improvement bonds at 10:30 a.m. Wednesday.
The University System of Maryland (Aa1/AA+/AA+/) is set to sell $104.125 million of auxiliary facility and tuition revenue bonds, Series 2026A, at 10:45 a.m. Wednesday.
