After outperforming the larger weakness in U.S. Treasuries over the past week, municipals played some catch up Friday seeing pressure across the curve ahead of holiday-shortened, but still heavy supply week.

Triple-A yields rose two to 5 basis points while Treasuries were stronger 10-years and in, to shut out every week of more mixed economic data that has economists continually reevaluating their Federal Reserve policy expectations with little consensus.

“On the back of stronger payrolls, and this week’s hotter-than-expected inflation prints, the probability of a rate cut next month has meaningfully declined,” in accordance with Barclays PLC in a weekly report. “Not that way back investors were expecting a 50bp cut in November; now even 25bp will not be fully priced in by fed fund futures.”

Ratios were little modified on the day’s moves with the two-year muni-to-Treasury ratio Friday at 62%, the three-year at 61%, the five-year at 62%, the 10-year at 67% and the 30-year at 83%, in accordance with Refinitiv Municipal Market Data’s 3 p.m. EST read. ICE Data Services had the two-year at 63%, the three-year at 62%, the five-year at 63%, the 10-year at 68% and the 30-year at 83% at 3:15 p.m.

“Despite the fact that ratios have increased barely this week from their recent lows, they’re still moderately unattractive at current levels,” Barclays strategist Mikhail Foux wrote. “Going into October, we were hoping for a greater entry point prior to elections, but at this point we aren’t sure that investors will actually get what they were hoping for.”

Nonetheless, as secondary activity picked up Friday, J.P. Morgan’s Peter DeGroot said it’s value noting that reinvestment capital is “expected to plummet to the near-lows of the yr in the approaching weeks, and accordingly, despite regular [mutual fund] inflows, we expect that the municipal market will cheapen leading as much as the election.

“While off from the recent spike in May, dealer inventories have moved higher to 10% above the trailing one-year average,” DeGroot said. “Generally higher levels of inventory are the results of continued elevated tax-exempt supply in the first,” he said.

“Naturally, this adds to the cheapening bias in large supply weeks, as deals are priced to clear the market.”

The vacation-shortened week will see about $11 billion of recent issuance led by $2.2 billion of tax-exempt and taxable transportation system bonds from the Latest Jersey Transportation Trust Fund Authority (A2/A-/A/).

Chicago can also be set to cost $1.575 billion of Chicago O’Hare International Airport AMT and non-AMT general airport senior lien revenue refunding bonds Thursday.

Recently upgraded Pennsylvania (Aa2/A+/AA/) leads the competitive slate with $1.63 billion of general obligation bonds in three sales Wednesday.

The Metropolitan Governments of Nashville and Davidson Counties, Tennessee, (Aa2/AA+//) may even tap the competitive market Thursday with $786.66 million of general obligation improvement bonds in three sales.

“If market participants consider that muni supply will completely disappear in November-December, they may find yourself being dissatisfied, as the typical monthly issuance within the last two months of the yr averaged about $30 billion previously five years, and even when it lower this yr, it mustn’t be by that much,” Foux said.

DeGroot said several aspects remain that reinforce his view that the period between now and the election “could present the very best opportunity of the yr, and possibly of your entire rate cycle, to buy municipal bonds.”

CUSIP requests fall
The combination total of identifier requests for brand spanking new municipal securities, including municipal bonds, long-term and short-term notes, and industrial paper, fell 10.2% versus August totals, in accordance with CUSIP Global Services. On a year-over-year basis, overall municipal volumes are up 7.2%.

For the particular category of municipal bond identifier requests, there was a drop of 12.9% month-over-month, but requests for municipal bond identifiers are still up 6.9% year-over-year.
 
AAA scales
Refinitiv MMD’s scale was cut: The one-year was at 2.73% (+5) and a couple of.47% (+3) in two years. The five-year was at 2.44% (+3), the 10-year at 2.78% (+3) and the 30-year at 3.69% (+3) at 3 p.m.

The ICE AAA yield curve was little modified: 2.73% (unch) in 2025 and a couple of.49% (unch) in 2026. The five-year was at 2.45% (+2), the 10-year was at 2.76% (+3) and the 30-year was at 3.63% (+2) at 3 p.m.

The S&P Global Market Intelligence municipal curve saw cuts: The one-year was at 2.77% (+4) in 2025 and a couple of.50% (+3) in 2026. The five-year was at 2.45% (+3), the 10-year was at 2.75% (+3) and the 30-year yield was at 3.64% (+3) at 3 p.m.

Bloomberg BVAL saw cuts: 2.74% (+2) in 2025 and a couple of.49% (+2) in 2026. The five-year at 2.47% (+3), the 10-year at 2.74% (+3) and the 30-year at 3.64% (+2) at 3 p.m. 

Treasuries made gains 10 years and in.

The 2-year UST was yielding 3.945% (-6), the three-year was at 3.861% (-5), the five-year at 3.884% (-4), the 10-year at 4.081% (-1), the 20-year at 4.444% (+1) and the 30-year at 4.3%9 (+1) at 3:45 p.m.

Primary to come back:
The Latest Jersey Transportation Trust Fund Authority (A2/A-/A/) is about to cost Thursday $1.5 billion of transportation system tax-exempt and taxable bonds. BofA Securities.

The Latest Jersey Transportation Trust Fund Authority (A2/A-/A/A) can also be set to cost Thursday $1.2 billion of transportation program bonds, consisting of $700 million of exempts, serials 2039-2042 and $500 million of taxables, serials 2025-2027. BofA Securities.

Chicago is about to cost $1.575 billion of Chicago O’Hare International Airport AMT and non-AMT general airport senior lien revenue refunding bonds Thursday, consisting of $515.72 million of Series 2024C refunding AMT bonds, $840.05 million of Series 2024D non-AMT bonds, $158.43 million of Series 2024E AMT bonds, and $61.225 million of Series 2024F non-AMT bonds. J.P. Morgan Securities LLC.

The Southeast Energy Authority is about to cost Wednesday $700 million of energy supply revenue bonds. Goldman Sachs & Co. LLC.

The Dormitory Authority of the State of Latest York is about to cost Thursday $500 million of White Plains Hospital Obligated Group revenue bonds (Baa3/BBB-//), serials 2038-2053, terms 2058, 2063. BofA Securities.

The West Contra Costa Unified School District, California, (/AA//) is about to cost Wednesday $352.785 million of general obligation bonds, consisting of tax-exempts and taxables. Insured By: BAM. J.P. Morgan Securities LLC.

The Equitable School Revolving Fund is about to cost Wednesday $344.65 million of senior national charter school revolving loan fund revenue social bonds (/A//) via the Arizona Industrial Development Authority and the California Infrastructure and Economic Development Bank consisting of $200 million of Series A, serials 2029-2044, terms 2049, 2054, and $144.65 million of Series B, serials 2029-2044, terms 2049, 2054, 2059. Siebert Williams Shank & Co., LLC.

The School District of Pasco County, Florida, (Aa3//AA/) is on the day-to-day calendar with $197.195 million of sales tax revenue bonds, Series 2024, serials 2025-2039. BofA Securities.

Orlando, Florida, (/AAA/AAA/) is about to cost Wednesday $149.27 million of water reclamation system improvement revenue and refunding bonds, consisting of $132.18 million of Series 2024A revenue bonds, serials 2025-2054, and $17.09 million of Series 2024B refunding bonds, serials 2025-2032. BofA Securities.

Louisiana (Aa3/AA//) is about to cost Wednesday $141.88 million of gasoline and fuels tax second lien revenue refunding bonds. Wells Fargo Bank, N.A. Municipal Finance Group.

The Clear Creek Independent School District, Texas, (Aaa//AAA/) is about to cost Wednesday $139.74 million of unlimited tax refunding bonds, consisting of $129.055 million of PSF-guaranteed Series 2024A, serials 2026-2040, and $10.685 million of Series 2024B (non-PSF), serial 2029. Jefferies LLC.

The Dormitory Authority of the State of Latest York is about to cost Thursday $111.225 million of Montefiore Obligated Group Revenue bonds, serials 2025-2026, 2030-2044, terms 2047. BofA Securities.

The Torrance Unified School District, California, (Aa2/AA//) is about to cost Thursday $110.385 million of general obligation bonds. Piper Sandler & Co.

Manchester, Latest Hampshire, (/AA-//) is about to cost Tuesday $108.02 million of sewer revenue green bonds, serials 2026-2044, terms 2049, 2054. Raymond James & Associates, Inc.

Grayson County Junior College District, Texas, (Aa2//AA/) is about to cost $104.85 million of general obligation bonds, serials 2028-2044, term 2049. BOK Financial Securities, Inc.

The Missouri Public Utilities Commission (nonrated) is about to cost Wednesday $102.5 million of interim construction refunding notes, serials 2026. D.A. Davidson & Co.

The Central Florida Tourism Oversight District (/AA-/AA-/) is about to cost Thursday $99.3 million of ad valorem tax bonds, series 2024A, serials 2025-2044. BofA Securities.

Palm Beach County, Florida, (A1/AA-//) is about to cost Wednesday $97.715 million of airport system revenue improvement bonds, consisting of $23.865 million of non-AMT bonds, and $73.85 million of AMT bonds. J.P. Morgan Securities LLC.

Competitive:
Pennsylvania (Aa2/A+/AA/) is about to sell $1.63 billion of general obligation bonds in three sales Wednesday consisting of $235.16 million at 10 a.m., $687.5 million at 10:30 a.m. and $707.5 million at 11 a.m. eastern.

The Metropolitan Governments of Nashville and Davidson Counties, Tennessee, (Aa2/AA+//) is about to sell Thursday $786.66 million of general obligation improvement bonds in three sales, consisting of $266.385 million at 10:15 a.m., $205.805 million at 10:30 a.m. and $314.47 million at 10:45 a.m. eastern.

The State Public Works Board of California is about to sell $210.31 million of lease revenue various purpose bonds at 11:30 a.m. eastern Wednesday.

The Virginia Public School Constructing Authority (Aaa/AAA/AAA/) is about to sell $132.295 million of special obligation school financing bonds at 10:30 a.m. eastern Tuesday.

Suffolk County, Latest York, is about to sell $164.415 million of public improvement serial bonds at 11 a.m. eastern Wednesday.

Nevada is about to sell $116.51 million of general obligation bonds at 11:30 a.m. eastern Tuesday.