Municipals were firmer Friday ahead of a larger new-issue calendar as U.S. Treasury yields fell and equities were down.
Muni yields were bumped up to four basis points, depending on the curve, while UST yields fell eight to nine basis points across the curve.
Market activity has been somewhat “subdued,” and USTs yields have been “relatively well-behaved,” though the 10- to 30-year rates have slightly underperformed, moving up three to five basis points, said Barclays strategist Mikhail Foux.
“Normally, that would result in tax-exempts outperforming, but not this time, as MMD-UST ratios have moved up 1-2 percentage points across the curve,” he said.
The underperformance happened during a lighter supply week, “unfazed by sizable fund inflows,” he said.
The two-year municipal to UST ratio Friday was at 63%, the five-year at 64%, the 10-year at 67% and the 30-year at 85%, according to Municipal Market Data’s 3 p.m. EST read. ICE Data Services had the two-year at 61%, the five-year at 62%, the 10-year at 65% and the 30-year at 82% at 4 p.m.
Ten-year ratios “failed to breach” 65% and stayed narrowly bound between 65% to 70% levels, Foux said.
The long end has continued to underperform, “with the 10s20 and 10s30s yield curves steepening 16bp and 20bp, respectively this year,” he said.
This is due to “concerns about long-dated rates, as the Fed[eral Reserve] has paused its rate cutting cycle, at least for now” and a pick-up in longer-dated supply, according to Foux.
The share of 22-plus-year bonds has risen to 35% of the total year-to-date, after hovering in the 30% to 32% range over the past several years, he said.
This occurred at the time when supply of one- to five-year bonds declined proportionally, he said.
For taxable, the BBB portion of the index has “meaningfully underperformed” in 2025 with the single-A to BBB differential at the widest level in over a month, he said.
The BBB taxable muni index is seeing positive returns for the month, but is up only 0.51% year-to-date.
“The main cause of the underperformance of this relatively small index bucket (just 166 CUSIPs) is the underperformance of bonds backed by GSA leases,” Foux said.
“There are only a handful of names in this sub-sector, but it seems that a lot of them moved on the back of the projected DOGE cuts, coupled with the downgrade of the NASA headquarters bonds,” he said.
New-issue calendar
Issuance for next week rises to an estimated $7.537 billion, with $5.611 billion of negotiated deals and $1.926 billion of competitive deals on tap.
The Black Belt Energy Gas District leads the negotiated calendar with $900 million of gas project revenue bonds.
The competitive calendar is led by the Virginia Public Building Authority with $324 million of public facilities revenue bonds.
CUSIP requests fall
The aggregate total of identifier requests for new municipal securities — including municipal bonds, long-term and short-term notes, and commercial paper — fell 14.1% versus December totals. On a year-over-year basis, overall municipal volumes were up 1.8%.
Texas led state-level municipal request volume with a total of 78 new CUSIP requests in January, followed by California and New York, each of which had 59 new municipal CUSIP requests in the first month of the year.
For municipal bond identifier requests specifically, there was a drop of 16.0% month-over-month, but on a year-over-year basis, these requests were up 5.4%.
AAA scales
MMD’s scale was bumped two to four basis points: The one-year was at 2.62% (-2) and 2.64% (-2) in two years. The five-year was at 2.71% (-3), the 10-year at 2.96% (-4) and the 30-year at 3.97% (-4) at 3 p.m.
The ICE AAA yield curve was bumped two basis points: 2.67% (-2) in 2026 and 2.63% (-2) in 2027. The five-year was at 2.72% (-2), the 10-year was at 2.95% (-2) and the 30-year was at 3.89% (-2) at 4 p.m.
The S&P Global Market Intelligence municipal curve was bumped up to a basis point: The one-year was at 2.65% (-1) in 2025 and 2.66% (-1) in 2026. The five-year was at 2.75% (-1), the 10-year was at 2.98% (-1) and the 30-year yield was at 3.93% (unch) at 4 p.m.
Bloomberg BVAL was bumped up to three basis points: 2.56% (unch) in 2025 and 2.62% (-1) in 2026. The five-year at 2.71% (-3), the 10-year at 2.96% (-3) and the 30-year at 3.92% (-1) at 4 p.m.
Treasuries were firmer.
The two-year UST was yielding 4.191% (-8), the three-year was at 4.195% (-8), the five-year at 4.256% (-9), the 10-year at 4.417% (-9), the 20-year at 4.698% (-8) and the 30-year at 4.667% (-8) near the close.
Primary to come
The Black Belt Energy Gas District (Baa1/NR/NR/NR/) is set to price $900 million of gas project revenue bonds, 2025 Series B. Goldman Sachs.
The South Carolina Public Service Authority (/A-//) is set to price Tuesday $650 million of revenue bonds. BofA Securities.
The Pennsylvania Turnpike Commission (Aa3///) is set to price Thursday $602.81 million of turnpike revenue bonds. RBC Capital Markets.
The New York City Municipal Water Finance Authority (Aa1/AA+/AA+/) is set to price Wednesday $600 million of water and sewer second general resolution revenue bonds, Fiscal 2025 Series BB, serials 2043-2044, 2048, 2050, 2052-2053, 2055. BofA Securities.
The Bay Area Toll Authority is set to price Tuesday $379.08 million of San Francisco Bay Area toll bridge revenue bonds, consisting of $279.08 million of 2025 Series F-1 (NR/AA/AA/) and $100 million of 2025 Series SSL-1 (NR/AA-/AA-/). Wells Fargo.
Auburn University (Aa2/AA-/NR/NR/) is set to price Wednesday $333.435 million of general fee revenue bonds, consisting of $139.715 million of Series 2025A and $193.72 million of Series 2025B. Jefferies.
The Idaho Housing and Finance Association (Aaa/AA+/NR/NR/) is set to price Wednesday $318.015 transportation expansion and congestion mitigation fund sales tax revenue bonds, Series 2025A, serials 2026-2045, 2050, term 2049. BofA Securities.
The Idaho Housing and Finance Association (Aa1///) is set to price Tuesday $250 million of taxable single-family mortgage bonds, 2025 Series A, serials 2025-2037, terms 2040, 2045, 2049, 2065. RBC Capital Markets.
The Georgia Housing and Finance Authority (/AAA//) is set to price Monday $244.445 million of single-family mortgage refunding bonds, consisting of $208.08 million of non-AMT bonds 2025 Series A, serials 2034-2037, terms 2040, 2045, 2050, 2055; and $36.365 million of taxable refunding bonds, 2025 Series B, serials 2025-2034. Raymond James.
The Monmouth County Improvement Authority, New Jersey, is set to price Tuesday $237.071 million of non-rated governmental pooled loan project notes, serial 2026. Raymond James.
The Missouri Joint Municipal Electric Utility Commission’s (A2//A/) is set to price Tuesday $200 million of Prairie State Project power project revenue refunding bonds. BofA Securities.
The Carroll City-County Hospital Authority, Georgia, (Aa2/AA//) is set to price Wednesday $175.72 million of Tanner Medical Center project refunding revenue anticipation certificates, serials 2026-2045, terms 2050, 2055. Raymond James.
The Board of Governors of the Colorado State University System is set to price Wednesday $108.74 million of non-rated system enterprise revenue and revenue refunding bonds, Series 2025B, term 2055. Morgan Stanley.
The Massachusetts Development Finance Agency (Aa3/AA-/NR/NR/) is set to price Thursday $100 million of Boston University Issue refunding revenue bonds, Series 2025B-2, terms 2048, 2048. Barclays.
The Industrial Development Authority of the city of Phoenix and Industrial Development Authority of the county of Maricopa (Aa1///) is set to price Wednesday $100 million of non-AMT single-family mortgage revenue bonds, 2025 Series, serials 2027-2037, terms 2040, 2045, 2050, 2055, 2056. Stifel.
Competitive
Oyster Bay, New York, is set to sell $178.275 million of water district notes at 10:45 a.m. Tuesday.
The Fullerton Joint Union High School District, California, (Aa2/AA//) is set to sell $120 million of Election of 2024 GOs, Series A, at noon Tuesday.
The Virginia Public Building Authority (Aa1/AA+/AA+/) is set to sell $324.06 million of public facilities revenue bonds, Series 2025A, at 10:45 a.m. Wednesday.
The Springfield Board of Public Utilities, Missouri, is set to sell $275.53 million of certificates of participation at noon Wednesday.
Hoboken, New Jersey, is set to sell $172.019 million of bond anticipation notes at 11 a.m. Wednesday.