16th March 2026

Municipal market update

Last week, newly released data indicated that economic growth was much slower than expected in the last quarter of 2025, while core inflation continues to accelerate into 2026. The second release for Q4 2025 GDP showed that the U.S. economy rose at a seasonally and inflation-adjusted annual rate of just 0.7%, a sharp step down from the previous estimate of 1.4% and well below the 4.4% pace in Q3. For full year 2025, GDP growth was revised to 2.1%, below both the prior reading and the 2.8% pace in 2024. On the inflation side, January core PCE rose 0.4% on a seasonally adjusted basis, bringing the annual rate to 3.1%. While both readings were in line with expectations, they remain well above the Fed’s 2% target.

Cabrera will serve as co-manager on the $90 million Unlimited Tax General Obligation Bonds for the City Colleges of Chicago.

Additionally, the ongoing U.S.-Iran military conflict continued to fuel volatility in the global energy market, with soaring oil prices adding concerns about further upward pressure on inflation. The market is currently pricing in a 99% probability that the Fed will hold its benchmark rates steady in the range of 3.50% to 3.75% at the March 18th meeting. Expectations for the Fed’s interest rate cuts continue to shift later in the year with markets now pricing in only one reduction, likely no earlier than September.

Meanwhile, markets remained volatile with sell-offs across equities, U.S. Treasuries, and municipals. Over the week, U.S. Treasury yields rose by as much as 17 basis points with MMD yields moving higher in tandem, increasing by up to 17 basis points across the curve. On the supply side, the municipal market is expecting approximately $7.96 billion to be priced this week, lower than prior weeks. Investors continue to add another $612 million to municipal funds, representing the sixteenth consecutive week of inflows and bringing the total inflows for 2026 to over $15 billion. The SIFMA Municipal Swap Index reset to 2.43%, up from 1.54%.

Cabrera will serve as co-manager on the $90 million Unlimited Tax General Obligation Bonds for the City Colleges of Chicago. This week’s three largest transactions include::

$2.56 billion Dormitory Authority of the State of New York State (DASNY) Personal Income Tax Revenue Bonds, Series 2026A&B (Aa1/-/-/AAA)
$2.39 billion State of California General Obligation and Refunding Bonds (Aa2/AA-/AA/-)
$752 million Arkansas Development Finance Authority Environmental Improvement Revenue Bonds, Series 2026A7B (Baa2/BBB/-/-)

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