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21st September 2026

Municipal market update

Last week, the Federal Reserve’s unanimous decision to raise the benchmark rate by 25 basis points took center stage. The move affirmed the Fed’s political independence and its commitment to bringing down inflation. While the hike itself was largely priced in by markets, Chair Warsh’s tone was more hawkish than expected, and the updated dot plot signaled additional hikes later this year.

SIFMA moved in tandem, increasing 52 basis points to 3.22%.

Bloomberg’s Fed funds forecast still projects lower rates in 2027, but the path remains highly uncertain and largely depends on progress against inflation and the outlook for the war with Iran. The rate hike was followed by a broad selloff. Week over week, Treasury and MMD yields rose as much as 14 and 24 basis points, respectively, with losses concentrated at the front end of the curve while the long end saw slight gains. As a result, both the Treasury and MMD curves flattened. On Friday, the two-year MMD reached 3.01%, the first time it has exceeded 3% since April 2025. SIFMA moved in tandem, increasing 52 basis points to 3.22%. Meanwhile, ratios held steady, and attractive taxable-equivalent yields drew increased crossover buying from insurance companies, banks, and other institutions.

Technical factors remain soft as retail investors moved to the sidelines, pulling $1.8 billion from municipal bond mutual funds last week and breaking a 21-week inflow streak. Secondary-market bid-wanted lists continued to swell, surging to more than $11 billion, their highest level since April 2025, as investors raised cash to fund purchases of new municipal issuance.

This week, primary-market supply is expected to be heavy at approximately $14 billion as issuers return to market following the FOMC meeting. Two marquee negotiated deals exceed $1 billion. The three largest transactions on this week’s calendar include:

• $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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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.

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