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21st July 2025

Municipal market update

Reversing last week’s trend, MMD saw a significant increase in yields, especially on the long-end, while treasury yields were mixed week-over-week. The market was caught off guard on Wednesday as reporting indicated that President Trump had penned a letter to fire Jerome Powell. Trump quickly walked this back as the market regained its composure.

The MMD Yield curve continued to steepen to well over the 1 and 10-year averages. The current MMD 1 to 30-year spread is 22bps higher than 1 week ago, 74bps higher than the 1-year average, and 93 bps higher than the 10-year average, as investors continue to expect short-term rate cuts balanced against long-term uncertainty due to the potential for heavy deficit spending.

The MMD/UST ratio remains split, with the 5-year remaining well below historical levels. The 10-year remains at the 1-year average but below the 10- and 14-year averages. The 30-year remains at or above historical averages.

Municipal bond fund inflows turned negative after 10 consecutive weeks of positive inflows, with an outflow of $225 million. Negotiated supply is expected to exceed $12.4 billion this week, $200 million above last week, and estimated reinvestment dollars remain high at $52.89 billion before dropping again to $27.6 billion in September. CPI came in slightly over expectation at 2.7% vs 2.6% Y-o-Y. PPI was slightly below expectations at 2.3% vs 2.6% Y-o-Y. University of Michigan Sentiment came in below expectations at 61.8 vs 61.5, and jobless claims printed at 221K, less than the expected 233K. While inflationary metrics remain sticky, it's hard to tell if this will have any effect on the Fed's future rate cuts. The SIFMA municipal swap index rose to 2.46% vs 1.63% the previous week.

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17th November 2025

Municipal market update

The municipal market held steady last week with MMD unchanged despite a light new issue calendar last week met with uneven demand. Lipper reported steady fund inflows at $405 million with a slowing primary calendar and upcoming November and December redemption flows, providing a favorable backdrop.

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