Municipals were little modified Tuesday as U.S. Treasuries were firmer and equities were mixed toward the highest of the session.

Muni yields remain near levels seen to start with of summer last yr, said Tom Kozlik, managing director and head of public policy and municipal strategy at HilltopSecurities.

Yields may move lower after the Federal Reserve “communicates its goals to ease policy in coming meetings,” he said.

Munis also “show spreading good news, noting recently stronger mutual fund inflows, persistently solid SMA demand, and falling yields despite the strong pace of tax-exempt issuance,” said Matt Fabian, a partner at Municipal Market Analytics.

Issuance is at $277.228 billion year-to-date, up 3.13% year-over-year, in response to LSEG.

As August approaches, issuance will slow as market participants enjoy summer vacation, said Chris Brigati, senior vice chairman and director of strategic planning and fixed-income research at SWBC.

This, and lighter supply as a consequence of November election, will mean muni paper won’t see “significant cheapening,” he said. 

The two-year muni-to-Treasury ratio Tuesday was at 65%, the three-year at 67%, the five-year at 68%, the 10-year at 68% and the 30-year at 84%, in response to Refinitiv Municipal Market Data’s 3 p.m. EST read. ICE Data Services had the two-year at 64%, the three-year at 66%, the five-year at 68%, the 10-year at 68% and the 30-year at 83% at 3:30 p.m.

Muni ratios “remain tethered to levels that fail to encourage attractive buying opportunities,” Brigati said.

The “strongest demand” for munis has been in the form of flows into institutional muni funds, though this stays to be not “deep, consistent demand” from 2021, Kozlik said.

“The following demand-phase could be an acceleration of demand as rate easing expectations grow,” he said. “One of the best ways the 2024 supply and demand dynamic is shaping up and the potential path lower for rates of interest each further strengthen the argument for tax-exempt municipals.”

Along with recent inflows, demand stays robust due to “regular” reinvestment monies for SMA portfolios, Brigati said.

Over the past three weeks, inflows into muni mutual funds and exchange-traded funds, in response to LSEG Lipper, show “gains by long and high yield strategies, helping boost NAV performance throughout the latter,” Fabian said.

“These are the reasonable areas of opportunity left by otherwise pervasive [separately managed account] buying”: last week’s trade counts were greater than 250,000, Fabian said.

July is the twelfth consecutive month with a few million total trades, he said.

Recent “rough equity price volatility” should profit retail muni allocations, Fabian said.

One other positive is the beginning of August, which may see the last “major surge” of reinvestment dollars in 2024, he said.

“Our sector’s challenge will probably be keeping SMA buyer interest if yields and available income begin to shrink via fund inflows or any rally coming out of this week’s Fed meeting and/or jobs data,” he said.

In the primary market Tuesday, Wells Fargo priced for institutions $1.105 billion of GOs for Latest York City (Aa1/AA/AA/AA+/), with yields bumped one to six basis points from Monday’s retail pricing. The first tranche, $1.081 billion of Fiscal Series 2025 A, saw 5s of 8/2025 at 3.00% (-1), 5s of 2029 at 2.99% (-2), 5s of 2034 at 3.16% (-4) and 5s of 2038 at 3.30% (-6), callable 8/1/2034.

The second tranche, $24.275 million of Fiscal Series 2025 B, saw 5s of 8/2025 at 3.00% (-1) and 5s of 2029 at 2.99% (-2), make whole call.

BofA Securities priced for the Port of Portland (/AA-/AA-/) $589.6 million of AMT Portland International Airport revenue bonds. The first tranche, $518.425 million of green bonds, Series 2024A, saw 5s of seven/2029 at 3.49%, 5s of 2034 at 3.74%, 5s of 2039 at 3.88%, 5.25s of 2044 at 4.13%, 5.25s of 2049 at 4.29% and 5.25s of 2054 at 4.35%, callable 7/1/2034.

The second tranche, $71.195 million of Series 2024B, saw 5s of seven/2025 at 3.49%, 5s of 2029 at 3.49%, 5s of 2034 at 3.74%, 5s of 2039 at 3.88% and 5.25s of 2044 at 4.13%, callable 7/1/2034.

J.P. Morgan priced for the Industrial Development Authority of Fairfax County, Virginia, (Aa2/AA+//) $368.245 million of Inova Health System Project healthcare revenue, Series 2024, with 5s of 5/2032 at 3.12%, 5s of 2051 at 4.06% and 4.125s of 2054 at 4.31%, callable 5/15/2034.

J.P. Morgan priced for the Central Florida Expressway Authority (A1/AA-//) $366.515 million of Assured Guaranty-insured senior lien revenue bonds. The first tranche, $148.185 million of Series 2024A, saw 5s of seven/2025 at 2.98%, 5s of 2029 at 2.95%, 5s of 2034 at 3.18%, 5s of 2039 at 3.33%, 5s of 2044 at 3.71%, 5s of 2049 at 3.95% and 5s of 2054 at 4.06%, callable 7/1/2034.

The second tranche, $218.33 million of Series 2024B, saw 5s of seven/2029 at 2.95%, 5s of 2034 at 3.18% and 5s of 2035 at 3.21%, callable 7/1/2034.

BofA Securities priced for the Illinois Housing Development Authority (Aaa///) $324.335 million of taxable social revenue bonds, Series 2024F, with all bonds pricing at par — 4.806s of 10/2025, 4.613s of 10/2029, 5.139s of 4/2034, 5.219s of 10/2034, 5.439s of 10/239 and 5.903s of 10/2054 — other than 6.25s of 10/2054 at 5.223%.

Inside the competitive market, Miami-Dade County, Florida, (Aa2/AA//) sold $234.96 million of capital asset acquisition special obligation bonds, Series 2024A, with 5s of 4/2027 at 2.97%, 5s of 2029 at 2.95%, 5s of 2034 at 3.12%, 5s of 2039 at 3.41%, 5s of 2044 at 3.80%, 5s of 2048 at 3.96% and 5s of 2054 at 4.10%, callable 4/1/2033.

AAA scales
Refinitiv MMD’s scale was unchanged: The one-year was at 2.86% and a few.85% in two years. The five-year was at 2.75%, the 10-year at 2.82% and the 30-year at 3.68% at 3 p.m.

The ICE AAA yield curve was narrowly mixed: 2.89% (-1) in 2025 and a few.84% (-2) in 2026. The five-year was at 2.76% (-1), the 10-year was at 2.81% (unch) and the 30-year was at 3.66% (+2. at 3:30 p.m.

The S&P Global Market Intelligence municipal curve was little modified: The one-year was at 2.89% (unch) in 2025 and a few.87% (unch) in 2026. The five-year was at 2.77% (unch), the 10-year was at 2.81% (unch) and the 30-year yield was at 3.64% (-1) at 3 p.m.

Bloomberg BVAL was unchanged: 2.88% in 2025 and a few.83% in 2026. The five-year at 2.74%, the 10-year at 2.76% and the 30-year at 3.65% at 3:30 p.m.

Treasuries were firmer.

The two-year UST was yielding 4.357% (-3), the three-year was at 4.172% (-2), the five-year at 4.036% (-2), the 10-year at 4.142% (-2), the 20-year at 4.494% (-2) and the 30-year at 4.399% (-2) at 3:30 p.m.

Primary to come back back
The Port of Seattle (A1/AA-/AA-/) is about to cost Thursday $822.225 million of intermediate lien revenue refunding bonds, consisting of $170.825 million of non-AMT bonds, Series 2024A, serials 2025-2044, and $651.4 million of AMT bonds, Series 2024B, serials 2025-2044, term 2049. BofA Securities. 

Tallahassee, Florida, (Aa3/AA//) is about to cost Thursday $201.295 million of energy system refunding revenue bonds, Series 2024, serials 2025-2042. Raymond James.

The Fayette County Development Authority, Georgia, (//BBB/) is about to cost Thursday $200 million of United States Soccer Federation revenue bonds, Series 2024. Goldman Sachs.

The Detroit Regional Convention Facility Authority (/A+/AA-/) is about to cost Thursday $107.98 million of convention facility special tax revenue refunding bonds, Series 2024C. J.P. Morgan.

Competitive
Latest Orleans is about to sell $183 million of public improvement bonds, Issue of 2024A, at 10:30 a.m. Eastern Wednesday.

Glendale, California, is about to sell $166.88 million of electrical revenue bonds, 2024 Second Series, at 11 a.m. Eastern Thursday.