Municipal market update

Treasuries were pressured by ongoing Iranian attacks on shipping in the Strait of Hormuz and higher energy prices, though well-received 10-year and 30-year treasury auctions that priced through prevailing rates helped place a ceiling on yields. Markets are pricing-in three Fed rate hikes through 2027, beginning at the December 9th meeting. Municipal funds reported $1.1 billion of inflows as the market absorbed roughly $16 billion of supply. On the week, MMD yields fell 8bps in 2-years and 3bps in 5-years, but rose 1 and 5bps in 10 and 30 years, respectively. Treasury yields were lower 2 to 4bps across the curve, leaving the 2-year and 10-year municipal-to-Treasury ratios near 69% and 76%, respectively.

This holiday-shortened week, primary-market supply is expected to decline to approximately $8.7 billion, with $6.2 billion negotiated and $2.5 billion competitive. Cabrera will serve as Co-Manager on the City of New York’s $1.5 billion taxable, New Jersey Economic Development Authority’s $701 million, City of Bridgeport’s $161 million, and City of Garland’s $72 million issues. The three largest transactions on this week’s calendar include:

• $1.5 billion City of New York General Obligation Bonds, Fiscal 2027 Series G (Taxable)

• $701.3 million New Jersey Economic Development Authority School Facilities Construction Refunding Bonds (Tax-Exempt & Taxable)

• $425.2 million Maryland Health and Higher Educational Facilities Authority Revenue Bonds (University of Maryland Medical System Issue), Series 2026A