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14th September 2026

Municipal market update

Last week, the municipal market confronted numerous headwinds, including escalating tensions with Iran, reignited inflation fears, heavy new-issue supply, and weak technicals. Coming off the long Labor Day weekend, the $17 billion in supply recalibrated yields and ratios as issuers rushed to price deals ahead of this week's FOMC meeting.

As of Friday's close, CME FedWatch showed an 86.2% probability of a rate hike at the September FOMC meeting.

As the week advanced a renewed wave of tanker strikes in the Middle East beginning late Tuesday sparked tensions that persisted throughout the week, sending crude oil prices over $100 per barrel on Wednesday, a level not seen since May. Inflation concerns were reignited further on Thursday, as the August PPI release came in as expected at 0.4% for the month, though the year-over-year figure came in at 5.4% - 0.1 percentage point above expectations and well above the Fed's 2% target. Markets sold off sharply in response: Treasury yields rose as much as 14 basis points across the curve on the day, with the 30-year hitting 5.37%, its highest since 2007, and MMD followed suit, weakening up to 15 basis points. Friday brought a partial reversal as oil eased, and CPI came in as expected at 3.4%, calming sentiment somewhat, though the week's weakness remained evident. The short-end continued selling off, but long-dated yields came down in both MMD and UST, by 5 and 2 basis points, resspectively. As of Friday's close, CME FedWatch showed an 86.2% probability of a rate hike at the September FOMC meeting.

Technical factors remain soft as we enter this week. Investor bond fund flows of $193 million are significantly below the 6-week moving average of $771 million and national reinvestment dollars are scant, following the summer high. Secondary-market bid-wanted lists continued to swell, easing to roughly $7 billion from last week’s $8 billion high, as investors raised cash to fund purchases of new issuance.

With the September FOMC meeting scheduled for this week, supply is light at $10 billion. Only one marquee negotiated deal surpasses $1 billion — the $1.67 billion New Jersey Transportation Trust Fund Authority issuance. Other notable deals include the $734.63 million Dormitory Authority of the State of New York issuance and the $623.36 million Hillsborough County (FL) issuance.

The three largest transactions on this week’s calendar include the following:

• $1.67 billion New Jersey Transportation Trust Fund Authority Transportation Program

Bonds, 2026 Series AA

• $734.63 million Dormitory Authority of the State of New York Northwell Health Obligated

Group, Revenue Bonds, Series 2026A

• $623.36 million Hillsborough County (Florida) Utility Revenue and Refunding Revenue Bonds

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Last week, the municipal market came under pressure as heavy new-issue supply, persistent inflation, and stronger-than-expected nonfarm payrolls pushed yields higher.

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