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20th July 2026

Municipal market update

MMD underperformed USTs this week, with muni yields rising 6–12 bps across the curve while Treasury yields were flat to 5 bps lower. The move came as fixed income markets absorbed renewed inflation pressure from higher energy prices, with Brent crude increasing from $76.01/bbl last Friday to $88.10/bbl this Friday, while markets continue to price a 61.4% probability of a September FOMC rate hike.

The SIFMA Municipal Swap Index reset to 2.91%, 109 basis points higher than the prior week.

Much of the volatility in munis, however, was driven by MMD/UST ratios moving back toward historical norms after reaching unusually rich levels at the start of last week, resulting in muni underperformance relative to Treasuries.

MMD/UST ratios have largely normalized after beginning last week at historically rich levels. The 5-year ratio increased to 64% from 61%, while the 10-year ratio rose to 69% from 67%, bringing both maturities closer to their long-term averages. The 30-year ratio increased to 86% from 85%, but long munis remain relatively rich, sitting 2 percentage points below their 5-year average of 88% and 7 percentage points below their 10-year average of 93%. Despite the week's sell-off, the long end continues to offer less relative value versus historical norms than intermediate maturities.

Municipal technicals remain supportive despite the recent repricing. Visible supply stands at $13.19 billion, while municipal bond funds recorded $1.4 billion of inflows for the week, matching the prior week's total and extending the market's inflow streak to 13 consecutive weeks. Year-to-date net inflows now total $35.12 billion, reflecting continued demand for municipal bonds and providing a constructive backdrop as summer reinvestment cash remains available to absorb new issuance. The SIFMA Municipal Swap Index reset to 2.91%, 109 basis points higher than the prior week.

Cabrera Capital Markets will serve as Senior Manager on the week's fifth-largest transaction, Magnolia ISD’s $450 million Unlimited Tax School Building Bonds, Series 2026 (Aaa/NR/NR/NR – PSF). The Firm will also serve as Co-Manager on the $1.50 billion New York City Transitional Finance Authority Future Tax Secured Subordinate Bonds, Fiscal 2027 Series A, and the $943.9 million City of San Antonio Airport System Revenue and Refunding Bonds, Series 2026. The three largest transactions of this week include the following:

  • $1.50 billion New York City Transitional Finance Authority Future Tax Secured Subordinate Bonds, Fiscal 2027 Series A (Tax-Exempt) (NR/NR/NR/NR)

  • $1.17 billion District of Columbia Income Tax Secured Revenue Bonds, Series 2026A (Tax-Exempt) and Series 2026B (Federally Taxable) (Aa1/AAA/NR/NR)

  • $943.9 million City of San Antonio Airport System Revenue and Refunding Bonds, Series 2026 (AMT) (A2/A+/A+/NR)

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13th July 2026

Municipal market update

MMD and USTs both sold off this week, but MMD held up better. Muni yields rose 2–7 bps versus UST yields up 6–10 bps on the 5- and 30-year, reflecting the strong technical backdrop from reinvestment demand and moderate supply.

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