U.S. Treasuries sold off Friday after a much better-than-expected jobs report, prompting economists and traders to backtrack on expectations for interest rate cuts. The municipal market could not ignore this movement, and triple-A yields rose, but yields fell as they were significantly higher than taxable yields. Stocks rose on the news, pushing the Dow Jones Industrial Average to near all-time highs.
“Two weeks ago, the Fed cut interest rates for the first time in over four years, and today’s jobs report is critical in defining the scope of this rate cutting cycle,” said Lara Castleton, U.S. head of portfolio construction and strategy at Janus Henderson. It was,” he said. Dear investors. “This explosive jobs report will lend credence to soft-landing experts that the reason behind the rate cut was to normalize interest rates to levels appropriate for today’s economy.”
Mr Castleton said the numbers were “much stronger than anyone expected” and there should be fewer calls for a “more dramatic” 50 basis point cut in November. .
“On the back of today’s large payrolls and slightly stronger ISM and PMI numbers, most investors are in the 25bp pullback camp next month,” Barclays said in its weekly report. “After today’s data release, interest rates have sold off and the yield curve is flattening, which could create challenges for tax exemptions in the short term.”
The triple-A yield curve saw levels rise by 5 to 11 basis points depending on the curve, but UST saw the biggest losses on the front.
The Muni-to-UST ratio was adjusted downward as a result of the day’s moves. The Treasury-to-Treasury ratio on Friday for two-years was 58%, three-years 58%, five-years 60%, 10-years 64% and 30-years 82%, the paper said. Data from Refinitiv Municipal Market Data as of 3:00 p.m. ET.
ICE Data Services saw a significant reduction in size: 65% for 2 years, 64% for 3 years, 64% for 5 years, 69% for 10 years, and 69% for 30 years. 85% at 3pm
Municipal investors can expect $10 billion in new issuance in the first week of October and in the fourth quarter, led by a $1.5 billion taxable general obligation bond issue from New York City. Connecticut is contributing $935 million in general obligation bonds.
The most competitive deal was Tuesday’s deal for $521.75 million in general fund refinancing bonds from New York State.
Bond buyers have a 30-day visible supply of $17.3 billion.
“In our view, it will be very difficult for tax-exempt operators to cope with heavy pipelines as markets become richer and interest rates may become more volatile in the short term.” said Mikhail Fu, Managing Director and Head of Municipal Research Strategy. At Barclays. “Investors could start to take a step back, which would change the market’s positive tone and make us more cautious as we look to the heavy pipeline in the coming weeks.”
AAA scale
The Refinitiv MMD scale was cut across the curve. 1 year was 2.60% (+5) and 2 years was 2.36% (+8). As of 3 p.m., the 5-year yield was 2.35% (+8), the 10-year yield was 2.62% (+8), and the 30-year yield was 3.57% (+8).
The ICE AAA yield curve has been reduced by ~11 basis points to 2.68% (+6) in 2025 and 2.40% (+11) in 2026. The 5-year was 2.33% (+9) and the 10-year was 2.33% (+9). As of 4 p.m., it was 2.63% (+7) and the 30-year was 3.54% (+8).
The S&P Global Market Intelligence municipal curve has been lowered. The one-year yield was 2.63% (+7) in 2025 and 2.36% (+7) in 2026. The 5-year was 2.33% (+7) and the 10-year was 2.33% (+7). As of 4 p.m., the annual yield was 2.62% (+7) and the 30-year bond yield was 3.53% (+7).
Bloomberg BVAL lowered: 2.65% (+5) in 2025 and 2.40% (+5) in 2026. 5-year 2.3%6 (+5), 10-year 2.62% (+6), 30-year 2.3%6 (+5) -year, 3.54% (+6) at 4 p.m.
Government bonds were sold.
The 2-year UST yield was 3.926% (+21), the 3-year yield was 3.835% (+21), the 5-year yield was 3.811% (+18), and the 10-year yield was 3.979% (+13). Just before the closing price, the 20-year bond was 4.335% (+9) and the 30-year bond was 4.266% (+9).
future primary
New York City (Aa2/AA/AA/AA+) will price $1.5 billion in taxable general obligation bonds on Wednesday, including $820 million in taxable general obligation bonds with terms in 2049 and 2054; $680 million in bonds taxable from 2026 to 2044. Bohua Securities.
The State of Connecticut (Aa3/AA-/AA-/AA+) plans to price $935 million in general obligation bonds on Wednesday, including $560 million in Series F, Series 2025-2038; Series G Social GO, $240 million for series 2039-2044; Series H, Refund GO, $135 million for series 2025-2034. Siebert Williams Shank & Company
The Philadelphia Industrial Development Authority (Aa2/AA//) on Tuesday plans to price hospital revenue bonds for the Children’s Hospital of Philadelphia project at $550 million. JP Morgan Securities LLC
The Maryland Stadium Authority (Aa2/AA//) on Tuesday plans to price the Build to Learn Revenue Bonds (Series 2026-2044, Term 2049, 2054) at $413.41 million. BofA Securities.
The New York State Housing Finance Agency (Aa1///) on Wednesday plans to price the state Personal Income Tax Sustainability Revenue Bond at $259.99 million. Jeffries LLC.
North Carolina’s Cabarrus County Development Authority (Aa1/AA+/AA+/AA+) on Thursday plans to price limited debt redemption bonds to be issued from 2025 to 2044 at $238,305,000. Bohua Securities.
The Georgia Housing Finance Agency (/AAA//) on Tuesday plans to price its single-family mortgage non-AMT income bonds at $203.6 million. Morgan Stanley & Company LLC.
The East Baton Rouge Parish Capital Improvement District (Aa2/AA+//) on Tuesday plans to price MOVEBR sales tax revenue bonds running from 2025 to 2048 at $199.44 million. Stifel Nicolaus & Company, Inc.
Florida’s Pasco County School District (Aa3//AA/) on Tuesday plans to price its 2025-2039 sales tax revenue bonds at $197,195,000. BofA Securities, New York
Aldine Independent School District of Texas (Aaa/AAA//) plans to price its unrestricted tax-funded school construction and repayment bond, PSF-guaranteed, at $183.74 million. Cabrera Capital Markets LLC.
The Ohio Higher Education Facilities Commission will price the Xavier University 2024 Project Higher Education Facilities Revenue Repayment Bonds, series 2025-2042, period 2049, 2054, at $180,935,000. RBC Capital Markets.
The Colorado Housing Finance Agency (Aaa/AAA//) has determined that the value of taxable single-family mortgage bonds for serial years 2026 through 2034, 2036, 2039, 2044, and 2050 will be $163 million. I plan to set it to $. RBC Capital Markets.
The Hampton Roads Transportation Accountability Board (Aa1/AA//) on Tuesday announced the pricing of the Hampton Roads Transportation Fund Preferred Lien Revenue Bonds (Series 2030-2044, Term 2049, 2054, 2059, 2064). It is scheduled to be set at $152.73 million. BofA Securities.
ORLANDO, Fla. (/AAA/AAA/) will set a $149.27 million price tag on Wednesday to pay off water reclamation system proceeds and revenue bonds. Bohua Securities.
Mississippi Home Corp. (Aaa///) plans to price $125,815,000 of single-family mortgage revenue bonds on Tuesday. The bond is $96,835,000 non-AMT, serial numbers 2029-2036, terms 2039, 2044, 2049, 2054, and taxable amount of $28,980,000, serials 2025-2029, terms 2054. Wells Fargo Bank, NA Municipal Financial Group.
The Arizona Board of Regents (Aa3/A+//) on Wednesday plans to price the University of Arizona SPEED revenue repayment bonds guaranteed by BAM at $115.2 million. Morgan Stanley & Company LLC.
The California Municipal Finance Department is expected to set a $112,135,000 price for PRS California Obligated Group Projects’ revenue and refinancing bonds on Tuesday. Ziegler, Chicago
The Knoxville Metropolitan Area Airport Authority (A3/A//) plans to price the non-AMT and taxable airport revenue bonds at $111,015,000. Bohua Securities.
Washington State University (Aa3/A+//) will set a $105,975,000 general fund price on Tuesday to redeem serial past-due bonds from 2027 to 2040. Barclays Capital Co., Ltd.
Competitiveness:
New York State (Aa3/A+//) is scheduled to sell $521.75 million in general fund refinancing bonds at 11:15 a.m. Eastern Tuesday.
Nevada’s Clark County School District (A1/AA-//) will sell $400 million in limited general tax bonds at 11:30 a.m. Eastern Thursday.
Washoe County, Nevada (Aa3/AA//) is scheduled to sell $110,515,000 in general obligation bonds at 10:45 a.m. Tuesday.
