Municipals were regular Tuesday ahead of the Federal Open Market Committee meeting as U.S. Treasury yields were little modified and equities ended up.

This 12 months may even see higher levels of volatility resulting from the uncertainty about forthcoming policies from President Donald Trump’s administration, said BlackRock strategists.

“An emphasis on deregulation may quickly catalyze economic growth, and although latest tariffs could possibly be a marginal drag and moderately increase inflation, we consider those latest tariff threats will likely be more of a bargaining chip reasonably than a de facto policy,” they said.

The Fed meets this week, however the probability of one other cut at Wednesday’s meeting seems low amid elevated inflation and growth data, said Matt Fabian, a partner at Municipal Market Analytics.

Because the 12 months progresses, the Fed will progressively slow the pace of rate cuts, which should end by midyear, as “stalled progress toward the Fed’s 2% inflation goal, amid continued economic strength, won’t warrant substantial further easing,” BlackRock strategists said. They don’t expect rate hikes this 12 months.

“The Treasury yield curve will likely steepen, with front-end rates falling in cadence with an lively Fed early within the 12 months, and long-end rates staying range-bound to modestly higher amid fiscal deficit concerns and increased term premiums,” BlackRock strategists said.

“Retail demand via [separately managed accounts] stays present and lively; despite last week’s lack of Monday trading, MSRB traded par still exceeded $70 billion with greater than 250,000 total trades,” he said.

That bid is a function of elevated current income and yields, mostly stable credit prospects and the “continued proliferation of low-cost retail investment platforms and formats,” Fabian said.

“As none of those things are apt to alter within the near term, with the primary bolstered by substantial supply expectations that can challenge even the $30 billion of reinvestment expected for February, the near-term outlook ought to be relatively stable, pricewise,” he said.

This 12 months, muni demand will “remain firm as retail investors … capitalize on attractive absolute yields,” BlackRock strategists said.

Only a small amount of the $166 billion in outflows from mutual funds in 2022 and 2023 has been recaptured, and significant money still sits on the sidelines waiting for higher opportunities, they said.

Any further Fed rate cuts could also usher in incremental money, BlackRock strategists said.

Nonetheless, tax policy changes could disrupt their demand forecast.

“For instance, any increase or removal of the state and native tax deduction cap could reduce the necessity for tax shelter in high-tax states, decreasing state specific demand,” while lowering the company tax rate could “incrementally decrease demand from institutions,” BlackRock strategists said.

Also, demand for AMT bonds on the margins can be limited through reversal of the AMT provision to pre-Tax Cut and Jobs Act thresholds and phase-outs.

The 2-year municipal to UST ratio Tuesday was at 64%, the five-year at 64%, the 10-year at 66% and the 30-year at 83%, in response to Municipal Market Data’s 3 p.m. EST read. ICE Data Services had the two-year at 64%, the five-year at 64%, the 10-year at 66% and the 30-year at 81% at 4 p.m.

In the first market Tuesday, Goldman Sachs priced and repriced for the Oklahoma Turnpike Authority (Aa3/AA-/AA-/) $1.274 billion of Oklahoma Turnpike System second senior revenue bonds. The primary tranche, $1.123 billion of Series 2025A bonds saw bumps from the preliminary pricing: 5s of 1/2035 at 3.15% (-17), 5s of 2040 at 3.58% (-11), 5s of 2045 at 4.06% (-7), 5.25s of 4.22% (-5) and 4.25s of 2055 at 4.45% (-2), callable 1/1/2035.

The second tranche, $151.07 million of Series 2025B forward-delivery refunding bonds, saw 5s of 1/2032 at 3.35%, 5s of 2037 at 3.69%, 5s of 2040 at 3.90% and 5s of 2042 at 4.10%, callable 1/1/2036.

RBC Capital Markets priced for the Columbus Regional Airport Authority (A2/A//) $993.145 million of John Glenn Columbus International Airport airport revenue bonds. The primary tranche, $803.94 million of Series 2025A AMT bonds, saw 5s of 1/2030 at 3.69%, 5s of 2035 at 3.98%, 5s of 2040 at 4.25%, 5.25s of 2045 at 4.54%, 5.5s of 2050 at 4.61% and 5.5s of 2055 at 4.66%, callable 1/1/2035.

The second tranche, $189.205 million of Series 2025B non-AMT bonds, with 5s of 1/2030 at 3.09%, 5s of 2035 at 3.40%, 5s of 2040 at 3.75%, 5s of 2045 at 4.19%, 5.25s of 2050 at 4.31% and 5.25s of 2055 at 4.41%, callable 1/1/2035.

Morgan Stanley priced for the Regents of the University of California (Aa2/AA/AA/) $500 million of general revenue bonds, 2025 Series CA, with 5s of 5/2036 at 3.15% and 5s of 2040 at 3.44%, callable 5/15/2035.

J.P. Morgan priced for the L’Anse Creuse Public Schools, Michigan, (/AA//) $102.53 million of Michigan School Bond Qualification and Loan program-insured 2025 school constructing and site unlimited tax GOs, Series I, with 5s of 5/2027 at 2.88%, 5s of 2030 at 3.00%, 5s of 2035 at 3.37%, 5s of 2040 at 3.73%, 5s of 2045 at 4.15% and 5s of 2049 at 4.28%, callable 5/1/2035.

Within the competitive market, Mecklenburg County, North Carolina, (Aa1/AA+/AA+/) sold $230.41 million of limited obligation bonds to Truist Securities, with 5s of two/2026 at 2.72%, 5s of 2030 at 2.87%, 5s of 2035 at 3.11%, 5s of 2040 at 3.47% and 4s of 2045 at 4.15%, callable 2/1/2035.

The Tamalpais Union High School District, California, (Aaa///) sold $175 million of GO 2024 Election bonds, 2025 Series A, to Jefferies, with 5s of 8/2026 at 2.44%, 5s of 2027 at 2.46%, 5s of 2035 at 2.79%, 4s of 2040 at 3.45%, 4s of 2045 at 3.93% and 4.125s of 2050 at 3.95%, callable 8/1/2034.

AAA scales
MMD’s scale was unchanged: The one-year was at 2.67% and a pair of.69% in two years. The five-year was at 2.79%, the 10-year at 3.00% and the 30-year at 3.96% at 3 p.m.

The ICE AAA yield curve was little modified: 2.70% (unch) in 2026 and a pair of.71% (unch) in 2027. The five-year was at 2.79% (+1), the 10-year was at 3.01% (+1) and the 30-year was at 3.88% (unch) at 4 p.m.

The S&P Global Market Intelligence municipal curve was little modified: The one-year was at 2.68% (unch) in 2025 and a pair of.72% (unch) in 2026. The five-year was at 2.78% (unch), the 10-year was at 3.00% (+1) and the 30-year yield was at 3.86% (unch) at 4 p.m.

Bloomberg BVAL was unchanged: 2.65% in 2025 and a pair of.71% in 2026. The five-year at 2.82%, the 10-year at 3.06% and the 30-year at 3.91% at 4 p.m.

Treasuries were little modified.

The 2-year UST was yielding 4.199% (flat), the three-year was at 4.245% (flat), the five-year at 4.337% (flat), the 10-year at 4.541% (+1), the 20-year at 4.844% (+1) and the 30-year at 4.783% (+1) near the close.

Primary to come back
Temple University (Aa3/A+//) is ready to cost Wednesday $219.475 million of revenue refunding bonds, First Series of 2025, serials 2026-2045. Loop Capital Markets.

The Mesa County Valley School District No. 51 (Aa3/AA-//) is ready to cost Thursday $190 million of Colorado State Intercept Program-insured GOs, serials 2042-2049. RBC Capital Markets.

The Public Finance Authority is ready to cost Wednesday $112.61 of non-rated essential housing revenue bonds, consisting of $93.775 million of senior bonds, Series 2025A, and $18.835 million of junior bonds, Series 2025B. Jefferies.

Competitive
The Bristol-Plymouth Regional Vocational Technical School District, Massachusetts, is ready to sell $120 million of state-qualified GO school bonds at 11 a.m., Wednesday.

Frederick County, Maryland, (Aaa/AAA/AAA) is ready to sell $194.185 million of GO public facilities project bonds, Series 2025A, at 10:30 a.m., Thursday.