Municipals were little changed Monday as the chance of former President Donald Trump being reelected increased following the assassination attempt over the weekend. U.S. Treasuries were weaker and equities were up.
Financial markets are trying to “absorb” the outcome of higher odds of Trump winning in November and the news of his pick of Sen. J.D. Vance of Ohio as his running mate, said James Pruskowski, chief investment officer at 16Rock Asset Management.
“The attempted assassination of former President Trump … has sent shockwaves through the country and raised the temperature over the upcoming elections,” said Vikram Rai, head of municipal strategy at Wells Fargo.
“For this current assassination attempt event, it is too soon to draw conclusions,” said David R. Kotok, co-founder and chief investment officer at Cumberland Advisors. “History shows that reactions in the first few hours or days can be dramatic but not conclusive.”
However, the assassination attempt boosted Trump’s odds of winning the presidential election in November from 61% prior to the shooting to 67% after, said Ipek Ozkardeskaya, senior analyst at Swissquote Bank, citing PredictIt data.
Before the assassination attempt, Barclays strategists Mikhail Foux and Clare Pickering said a split government was the most likely scenario.
“If neither party gains full control, tax reform is unlikely, in our view, and the individual provisions of the [Tax Cuts and Jobs Act] would expire,” they said.
In this case, they noted, “Treasury yields will likely move lower, tax-exempts might initially lag slightly but outperform later on as the top tax bracket increases, spreads of high tax state GOs might be negatively affected on the margin, while AMT bonds might underperform a bit more, even though at current spreads a lot of bad news has already been priced-in.”
A “red wave” was the second most likely scenario, where Republicans “would likely focus on extending the TCJA individual provisions,” according to Barclays strategists.
“Not only would the focus be on keeping top tax brackets low, but policymakers might also need to find additional pay-fors, and some parts of the tax-exempt muni market might be looked at for additional revenue,” they said.
“This outcome should be the most negative for tax-exempts (with the likely exception of AMT bonds), including healthcare and higher ed,” Barclays strategists said.
USTs will likely sell off “meaningfully,” and MMD-UST ratios should increase, they noted.
The least likely is a “blue wave,” where “Democrats might consider increasing corporate tax rates, as they see 21% rate being too low; they might also consider increasing the top tax bracket, in order to pay for other provisions, including removing SALT caps, addressing the AMT and extending tax rate cuts for earners that make less than $400,000,” Barclays strategists said.
If this happens, tax-exempts will likely “outperform even more than in the previous case as U.S. Treasuries sell off — not only would the top tax bracket increase, but we would likely see stronger demand for munis from banks and insurers,” they said.
Meanwhile, they noted “tax-exempt advance refundings could come back, which would mean heavier supply and a bit more pressure on muni credit spreads down the line.
The two-year muni-to-Treasury ratio Monday was at 65%, the three-year at 67%, the five-year at 68%, the 10-year at 66% and the 30-year at 83%, according to Refinitiv Municipal Market Data’s 3 p.m. EST read. ICE Data Services had the two-year at 66%, the three-year at 67%, the five-year at 68%, the 10-year at 68% and the 30-year at 84% at 3:30 p.m.
AAA scales
Refinitiv MMD’s scale was bumped up to two basis points: The one-year was at 2.92% (-2) and 2.90% (-2) in two years. The five-year was at 2.79% (-2), the 10-year at 2.80% (unch) and the 30-year at 3.68% (unch) at 3 p.m.
The ICE AAA yield curve was mixed: 3.00% (-3) in 2025 and 2.94% (-2) in 2026. The five-year was at 2.78% (-1), the 10-year was at 2.80% (+1) and the 30-year was at 3.66% (+2) at 3:30 p.m.
The S&P Global Market Intelligence municipal curve was bumped up to one basis point: The one-year was at 2.99% (-1) in 2025 and 2.95% (-1) in 2026. The five-year was at 2.80% (-1), the 10-year was at 2.80% (unch) and the 30-year yield was at 3.65% (unch) at 3 p.m.
Bloomberg BVAL bumped up to one basis point: 2.97% (-1) in 2025 and 2.91% (-1) in 2026. The five-year at 2.81% (unch), the 10-year at 2.80% (unch) and the 30-year at 3.69% (unch) at 3:30 p.m.
Treasuries were weaker.
The two-year UST was yielding 4.449% (flat), the three-year was at 4.231% (flat), the five-year at 4.126% (+2), the 10-year at 4.225% (+4), the 20-year at 4.551% (+5) and the 30-year at 4.457% (+6) at 3:30 p.m.
Primary to come
The New York City Transitional Finance Authority (Aa1/AAA/AAA/) is set to price Wednesday
The Regents of the University of California (Aa2/AA/AA/) is set to price Wednesday $1.327 billion of general revenue bonds, consisting of $821.125 million of Series BW, serials 2025-2041, 2054, and $505.925 million of Series BX, serials 2026, 2029, 2031. RBC Capital Markets.
Miami-Dade County, Florida, (/A+/A+/AA-/) is set to price Tuesday
The San Francisco Public Utilities Commission (Aa2/AA//) is set to price Thursday $634.115 million of wastewater revenue bonds, consisting of $547.835 million of green SSIP bonds, 2024 Series C and $86.28 million of non-SSIP bonds 2024 Series D. Morgan Stanley.
The commission is set to price Wednesday $518.165 million of taxable wastewater revenue bonds, consisting of $432.325 million of green SSIP bonds (Aa2///) 2024 Series A serials 2027 and $85.84 million of non-SSIP bonds (Aa2/AA//), 2024 Series B, serials 2027-2028, 2032-2037. BofA Securities.
The Lamar Consolidated Independent School District, Texas, (Aaa/AAA//) is set to price Wednesday $347.785 million of PSF-insured unlimited tax schoolhouse and refunding bonds, Series 2024, serials 2025-2059. Raymond James.
The Ohio Housing Finance Agency (Aaa///) is set to price Wednesday $275 million of social non-AMT mortgage-backed securities program residential mortgage revenue bonds2024 Series B. J.P. Morgan.
Phoenix (Aa1/AA+/AAA/) is set to price Tuesday $238.805 million of various purpose GOs, consisting of $133.62 million of tax-exempts, Series 2024A, and $105.185 million of taxables, Series 2024B. Piper Sandler.
The Hospital Authority of Hall County and the city of Gainesville, Georgia, (/A/A/) are set to price Tuesday $226.325 million of Northeast Georgia Health System Project revenue anticipation certificates, Series 2024, serials 2030, 2034. BofA Securities.
The New Hampshire Health and Education Facilities Authority (Aa1/AAA//) is set to price Tuesday $190.515 million of Dartmouth College Issue revenue bonds, Series 2015, consisting of $50.50 million of Series 2015A, serial 2040; $50.5 million of Series 2015B, serial 2040; $44.925 million of Series 2015C, serial 2038; and $44.59 million of, Series 2015D, serial 2038. RBC Capital Markets.
The Missouri Housing Development Commission (/AA+//) is set to price Monday $190 million of taxable and non-AMT single-family mortgage revenue bonds. Raymond James.
Galveston, Texas, (/A/A-/) is set to price Tuesday $160 million of
Portland, Oregon, (Aa2/AA//) is set to price Tuesday $154.715 million of second lien water system revenue refunding bonds, 2024 Series A, serials 2025-2039. Wells Fargo.
The New Mexico Mortgage Finance Authority (Aaa///) is set to price Tuesday $150 million of single-family mortgage program Class I bonds, consisting of $105 million of tax-exempt non-AMT bonds, Series 2024E, serials 2025-2036, terms 2039, 2044, 2049, 2054, 2055; and $45 million of taxables, Series 2024F, serials 2025-2034, terms 2039, 2044, 2049, 2054, 2055.
The Maryland Economic Development Corp. (/AA//) is set to price Thursday $148.435 million of Assured Guaranty-insured University of Maryland College Park-Leonardtown Project student housing revenue bonds, Series 2024, serials 2028-2034, terms 2044, 2054, 2059, 2064. RBC Capital Markets.
The Dormitory Authority of the State of New York (Baa3/BBB-//) is set to price Wednesday $144.075 million of Pace University revenue bonds, Series 2024A, serials 2027-2056. BofA Securities.
The California Municipal Finance Authority (/A//) is set to price Wednesday $131.795 million of Saint Ignatius College Preparatory revenue bonds, serials 2028-2044, terms 2049, 2054. Oppenheimer.
The Winchester Economic Development Authority, Virginia, (A1/A+//) is set to price Wednesday $131.22 million of fixed mode Valley Health System Obligated Group refunding revenue bonds, Series 2024A. RBC Capital Markets.
The Ascension Parish-Wide School District, Louisiana, (/AA///) is set to price Thursday $110 million of GO school bonds, Series 2024, serials 2025-2044. D.A. Davidson.
Carmel, Indiana, is set to price Thursday $107.765 million of waterworks refunding revenue bonds, consisting of $56.82 million of Series SERB, serials 2025-2049, and $50.945 million of Series SERC, serials 2025-2053. Stifel.
Competitive
Irving, Texas, (Aaa/AAA/) is set to sell $122.04 million of GOs, Series 2024, at 12 p.m. Eastern Tuesday.
Memphis, Tennessee, (Aa2/AA//) is set to sell $136.56 million of general improvement bonds, Series 2024A, at 10:30 a.m. Eastern Wednesday.
Rochester, New York, is set to sell $134.061 million of bond anticipation notes, 2024 Series III, at 11 a.m. Eastern Wednesday.