Municipal stocks improved on Friday after a volatile week for the asset class, ignoring losses in Treasuries, but stocks ended the week mixed.
Investors are expecting nearly $11 billion in new issuance, along with rising yields and ratios, in the final week of this month and the final week before the election.
Triple-A yields fell between 3 and 7 basis points, with longouts seeing the biggest gains, while Javy recorded a 4 basis point decline across the curve.
As a result of this day’s movements, the Muni-UST ratio decreased slightly. Two-year bonds were at 65% on Friday, three-year bonds at 64%, five-years at 65%, 10-years at 70% and 30-years at 85%, according to Refinitiv Municipal Market Data. . PM EST reading. ICE Data Services was 66% two years, 65% three years, 66% five years, 71% 10 years, and 84% 30 years as of 4 p.m.
After withdrawing from the deal earlier this week, Morgan Stanley on Friday announced that it would be closing the $1.243 billion Green Clean Energy Project Revenue Bond Series 2024E of the California Community Choice Financing Authority (A1///). The transaction price is 3.34% on September 5, 2027. , 3.50% in 5s in March 2029, 3.50% in 5s in September 2029, 3.86% in 5s in March 2032, 3.87% in 5s in September 2032, Mandatory put in 5s in February 2055 The day is 9/9. 3.92% in January 2032, callable on June 1, 2032.
Yields quickly rose as much as 18 basis points in Wednesday trading, but the move prompted investors to jump into the market and demand pushed yields lower again, with new issues priced earlier in the week. was traded on the secondary market.
“Given that the Fed is in the early stages of its easing cycle and that the general direction for UST rates is expected to be lower in the next phase, investors are highly motivated to buy based on current market levels heading into 2025. ”, said Peter DeGroot, managing director and head of the investment bank’s regional research and strategy team at JPMorgan.
Mikhail Fu, a strategist at Barclays, said the market could not hold out any longer and “finally cracked.”
“It started gradually, but by mid-week it felt like a capitulation trade for us. There was very little trading activity as investors became very cautious, which is not surprising. “No, but the ratio has increased and the amount of bids has skyrocketed,” he said.
Meanwhile, he said, “Dealers’ balance sheets continue to bulge, leaving less room to support the market.”
Next week’s issuance is estimated at $10.8 billion, with Wisconsin leading the way with $1.55 billion in government agencies, Pennsylvania Higher Education Facilities Authority with $1.1 billion in Thomas Jefferson University revenue bonds, and $860 million in Miami. The university issues revenue and refinancing bonds. Miami-Dade Educational Facilities Authority.
California leads the competitive calendar with $852,405,000 in tax-exempt and taxable GOs for various purposes.
Hu said the current decline “presents an opportunity and we are happy to buy more at lower levels ahead of the November election.”
He said Muniz is starting to price in the possibility of a red wave impact and that “if the red wave actually materializes, the market reaction may not be as pronounced.”
“While we do not feel that the correction is over and we need to see interest rates stabilize first, we believe that the muni market should remain relatively strong at the end of the year, so we remain “In 2024, regardless of the presidential outcome, for us it’s just a matter of finding a better entry point,” Fu said.
DeGroot said JPMorgan believes next weekend “marks the end of a difficult 2024 technical period, with November’s net supply (-$8 billion including calls) leading to broader valuation gains in the municipal market.” He said he expected that.
Bond buyers have a 30-day visible supply of $14.52 billion.
AAA scale
Refinitiv MMD size increased by 3 to 7 basis points. Year 1 was 2.83% (-3) and Year 2 was 2.65% (-3). As of 3 p.m., the 5-year bond is 2.64% (-3), the 10-year bond is 2.97% (-6), and the 30-year bond is 3.82% (-7).
The ICE AAA yield curve rose 2 to 7 basis points. In 2025 it was 2.94% (-2) and in 2026 it was 2.70% (-3). The 5-year was 2.65% (-3) and the 10-year was 2.65% (-3). As of 3:30 p.m., it was 3.97% (-5), and 30-year bonds was 3.76% (-2).
The S&P Global Market Intelligence municipal curve has risen. The one-year yield was 2.87% (-3) in 2025 and 2.68% (-3) in 2026. The 5-year was 2.67% (-3) and the 10-year was 2.67% (-3). As of 4 p.m., the annual yield was 2.95% (-4) and the 30-year bond yield was 3.76% (-6).
Bloomberg BVAL remains unchanged at 2.83% in 2025 and 2.64% in 2026. As of 4 p.m., the 5-year is 2.67%, the 10-year is 2.99%, and the 30-year is 3.79%.
Government bonds were weak.
The 2-year UST yield was 4.105% (+4), the 3-year yield was 4.048% (+4), the 5-year yield was 4.063% (+4), and the 10-year yield was 4.244% (+4). The closing price was 4.587% (+4) for 20-year bonds and 4.50% (+3) for 30-year bonds.
future primary
The State of Wisconsin (Aaa/AA+/AA+/) on Wednesday announced $886,245,000 in GO refund bonds for various purposes from 2025 to 2039 and $664.15 million in GO refund bonds for motor fuel taxes and vehicle-related fees. It is expected to be priced at $1.55 billion in general obligation bonds, consisting of $5,000 denominations. Bonds, serials 2025-2039, 2042. BofA Securities.
The Pennsylvania Higher Education Facilities Authority (A3/A/A/) will on Wednesday price $1.107 billion in Thomas Jefferson University revenue bonds, including 655 million Series 2024B-1 fixed rate revenue bonds. $285 million in series 2024B-2 fixed rate income bonds and $168 million in taxable revenue refund bonds. JP Morgan Securities Co., Ltd.
The Miami-Dade County Educational Facilities Authority (A2/A-//) is expected to set a price on Tuesday for $860 million in university revenue and refinancing bonds, including Series A, 2025-2048 Series B of $552 million and Series B in 2030 of $308 million. -2045. Barclays Capital Co., Ltd.
The New Orleans Aviation Commission (A2//A/) on Wednesday plans to price AMT, non-AMT, taxable general airport revenue refund bonds at $597.4 million. BofA Securities
The Virginia Housing Development Authority (Aaa/AAA//) on Tuesday plans to price its non-AMT and taxable Commonwealth Mortgage bonds at $455.48 million. Wells Fargo Bank, NA Municipal Financial Group.
Atlanta (Aa3/A+//) on Tuesday plans to price its water and wastewater subordinated lien sustainability revenue bonds at $383.51 million. JP Morgan Securities Co., Ltd.
The Houston Sports Authority of Harris County (A2/AA//) on Tuesday plans to price the Assured Guaranty-insured first and second lien redemption bonds at $329.68 million. Wells Fargo Bank, NA Municipal Financial Group.
Katy Independent School District, Texas (Aaa/AAA//) has $220.28 million in unrestricted tax refund bonds PSF on the daily calendar. BOK Financial Securities Co., Ltd.
The Indiana Department of Housing and Community Development (Aaa//AA+/) on Tuesday plans to price single-family non-AMT bonds, AMT bonds and taxable social income bonds at $198.62 million. JP Morgan Securities LLC
Florida’s Pasco County School District (Aa3//AA/) plans to price its sales tax revenue bonds on Tuesday at $197,195,000. Bohua Securities.
Build NYC Resource Corp. on Tuesday plans to price its revenue bonds for the Success Academy Charter School project at $150 million. PNC Capital Markets LLC.
The Nebraska Investment Finance Authority (/AAA//) on Wednesday plans to price a non-AMT, taxable single-family home income bond at $130.51 million. JP Morgan Securities Co., Ltd.
BROWNSBURG, Ind. 1999 School Building Corporation (/AA+//) on Tuesday plans to price $120.36 million in ad valorem property tax first lien bonds secured by the Indiana Aid Intercept Program. Stifel Nicolaus & Company, Inc.
The Maine Housing Authority (Aa1/AA+//) plans to price its $110 million mortgage purchase social bond on Tuesday (Retail Monday). Barclays Capital Co., Ltd.
The Atlanta Urban Redevelopment Authority (Aa1//AAA/) on Wednesday plans to price its revenue bonds for surface transportation and infrastructure projects at $103,735,000. Ramirez & Company Co., Ltd.
