Municipals were regular Monday as U.S. Treasuries were barely weaker and equities ended mixed.

The 2-year muni-to-Treasury ratio Monday was at 62%, the three-year at 65%, the five-year at 66%, the 10-year at 71% and the 30-year at 87%, in accordance with Refinitiv Municipal Market Data’s 3 p.m. EST read. ICE Data Services had the two-year at 43%, the three-year at 65%, the five-year at 66%, the 10-year at 70% and the 30-year at 88% at 3:30 p.m.

With just one week left in August, munis are seeing gains of 0.78% this month, pushing year-to-date returns to 1.28%, said Jason Wong, vice chairman of municipals at AmeriVet Securities.

It is a “stark reversal” for August returns from last yr, as muni were seeing losses of 1.79% “because the Fed was still in rate hike mode to combat high inflation,” he said.

Muni yields in August 2023 rose by a median of 26 basis points across the curve, with 10-year notes rising around 36 basis points, Wong said.

Month-to-date, 10-year muni yields have fallen by a median of two.5 basis points, “with the front end seeing yields drop by a median of twenty-two basis points, and the long end remaining flat,” he said.

“With Fed Chair [Jerome] Powell stating late last week that it was time to regulate its policy and cut rates, we must always expect to see the market react to his statements by pushing muni yields lower as we have now already seen Treasury yields tumble and stocks rise after he spoke,” Wong said.

“The summer slowdown was apparent over the past week, as holidays and absences contributed to a rather less lively week,” said Chris Brigati, senior vice chairman and director of strategic planning and fixed-income research at SWBC.

Apart from the front end of the muni curve, the market was “much less reactive” to the UST swings last week, but did play a slight catch-up following Powell’s speech on Friday.

Most of the main target remained on recent issues last week, but individually managed accounts “helped drive the front end of the MMD curve 12-13bps lower,” said Birch Creek strategists in a weekly report.

Some interest began to “perk up” within the secondary market, especially out long where 30-year muni-UST ratios neared 90%, they said.

“The forward calendar shows issuance might be above average over the subsequent few weeks, while reinvestment money is ready to drop off,” Birch Creek strategists said.

Ahead of the Labor Day holiday, issuance this week is “relatively average” at $8.9 billion, Brigati said.

In the first market Monday, BofA Securities held a one-day retail order for $2.617 million of assorted purpose GOs from California (Aa2/AA-/AA/). The primary tranche, $817.52 million of new-money bonds, saw 5s of 8/2026 at 2.49%, 5s of 2029 at 2.52%, 5s of 2033 at 2.81%, 5s of 2036 at 2.95%, 5.25s of 2044 at 3.47%, 5s of 2049 at 3.73%, 5.25s of 2049, 5.5s of 2049 at 3.62%, 4s of 2054 at 4.14%, 5.25s of 2054 and 5.5s of 2054 at 3.71%, callable 8/1/2034.

The second tranche, $1.799 billion of refunding bonds, with 5s of 8/2025 at 2.53%, 5s of 2029 at 2.52%, 5s of 2034 at 2.85%, 5s of 2039 at 3.17% and 5s of 2044 at 3.52%, callable 8/1/2034.

Supply will fall next week resulting from the vacation, but there are still some sizable deals on tap.

The North Texas Tollway Authority is ready to cost Sept. 5 $1.1 billion of first-tier and second-tier system revenue refunding bonds.

The Recent York City Transitional Finance Authority is ready to cost the week of Sept. 9 $1.8 billion of future tax-secured subordinate bonds.

The District of Columbia is ready to cost Sept. 10 $1.6 billion of new-issue and refunding GOs.

The Texas Transportation Commission is ready to Sept. 10 $878 million of GO mobility fund refunding bonds.

The Empire State Development Corp. is ready to sell the week of Sept. 16 $1.3 billion of sales tax revenue bonds.

Connecticut is ready to cost the week of Oct. 7 $935 million of GOs.

AAA scales
Refinitiv MMD’s scale was unchanged: The one-year was at 2.51% and a pair of.45% in two years. The five-year was at 2.42%, the 10-year at 2.69% and the 30-year at 3.57% at 3 p.m.

The ICE AAA yield curve was bumped as much as a basis point: 2.59% (-1) in 2025 and a pair of.50% (-1) in 2026. The five-year was at 2.42% (-1), the 10-year was at 2.65% (-1) and the 30-year was at 3.58% (unch) at 3:30 p.m.

The S&P Global Market Intelligence municipal curve was unchanged: The one-year was at 2.57% in 2025 and a pair of.51% in 2026. The five-year was at 2.42%, the 10-year was at 2.66% and the 30-year yield was at 3.54% at 3 p.m.

Bloomberg BVAL was bumped as much as a basis point: 2.51% (unch) in 2025 and a pair of.47% (unch) in 2026. The five-year at 2.46% (unch), the 10-year at 2.66% (-1) and the 30-year at 3.59% (unch) at 3:30 p.m.

Treasuries were a touch weaker.

The 2-year UST was yielding 3.934% (+2), the three-year was at 3.745% (+2), the five-year at 3.665% (+2), the 10-year at 3.817% (+1), the 20-year at 4.195% (+1) and the 30-year at 4.106% (+1) at 3:30 p.m.

Primary to come back:
Chicago (//A+/) is ready to cost Wednesday $1.004 billion of AMT and non-AMT Chicago O’Hare International Airport general airport senior lien revenue bonds, consisting of $563.945 million of AMT bonds, serials 2036-2044, terms 2048, 2053, 2059; and $440.045 million of non-AMT bonds, serials 2036-2044, terms 2048, 2053, 2059. Wells Fargo.

San Antonio, Texas, (Aa2/AA-/AA-/) is ready to cost Wednesday $763.795 million of electrical and gas systems revenue refunding bonds, consisting of $489.525 million of Series 2024D and $274.27 million of Series 2024E. J.P. Morgan.

The Utah Transit Authority is ready to cost Wednesday $469.915 million in tow series, $327.39 million of sales tax revenue refunding bonds, Series 2024, (Aa2/AA+/AA/), serials 2030-2040; and $94.525 million of subordinated sales tax revenue refunding bonds, Series 2024, (Aa3/AA/AA/), serials 2037-2040. Wells Fargo.

The Maine Health and Higher Educational Facilities Authority (A1///) is ready to cost Tuesday $189.28 million of Northeastern University revenue bonds. Morgan Stanley.

Pennsylvania State University (Aa1/AA//) is ready to cost Tuesday $157.345 million of Series 2024 bonds. Morgan Stanley.

The Texas Veterans Land Board (Aaa///) is ready to cost Wednesday $135 million of taxable refunding veterans bonds, term 2051. Jefferies.

The Indiana Finance Authority  (A3/A-//) is ready to cost Wednesday $133.96 million of Hendricks Regional Health sanatorium revenue refunding bonds. Piper Sandler.

Greenville, Texas, (/A//) is ready to cost Tuesday $128.245 million of electrical system revenue and refunding bonds, serials 2027-2044, terms 2049, 2054. Jefferies.

The Alaska Housing Finance Corp. (Aa2/AA+//) is ready to cost $127.65 million of State Capital Project Bonds II, 2024 Series A, refunding, serials 2027-2037, terms 2038, 2039. Raymond James.

The Rhode Island Commerce Corp. (A2/AA-//) is ready to cost Tuesday $126.485 million of Rhode Island DOT grant anticipation bonds, serials 2032-2039. BofA Securities.

The University of Kentucky (Aa3/AA//) is ready to cost Wednesday $101.255 million of lease purchase obligations, UK Healthcare Cancer Center Parkin project, serials 2025-2044, terms 2049, 2054. BofA Securities.

Competitive: 
Hamilton County, Tennessee, (Aaa/AAA/AAA/) is ready to sell $229.31 million of GOs at 10 a.m. eastern Tuesday and $22.71 million of GO refunding bonds at 10 a.m. eastern Tuesday.

The Davis School District Board of Education, Utah, (Aaa///) is ready to sell $100 million of GOs at 11:30 a.m. eastern Tuesday.

North Hempstead, Recent York, is ready to sell $100.858 million of GO bond anticipation notes at 10:30 a.m. eastern Thursday.