27th July 2026

Municipal market update

Munis underperformed Treasuries this week, with the MMD curve weakening 16–22 basis points as the market corrected following a period of very rich ratios, while Treasury yields also backed up by approximately 10–15 basis points across the curve. The move reflected a broad repricing in munis relative to Treasuries after ratios had reached unusually rich levels earlier in the month, prompting the sector to give back a meaningful portion of its recent outperformance.

The SIFMA Municipal Swap Index reset to 1.74%, 36 basis points lower than the prior week.

MMD/UST ratios have continued to normalize off their recent rich levels. Current ratios now sit above their 5-year averages on the 5- and 10-year, while the 30-year remains modestly rich, holding roughly 1 percentage point below its 5-year average. Since July 9, the UST/MMD ratio has jumped 5 percentage points on both the 5- and 10-year and 3 percentage points on the 30-year, underscoring how quickly the front and intermediate portions of the curve have cheapened relative to Treasuries.

Municipal technicals help explain the outsized swings seen this week. The market logged its 15th consecutive week of inflows, though at just $174 million — the weakest of the entire streak. At the same time, muni bid-wanteds climbed to their highest level in 18 weeks, producing the lowest ratio of bids wanted to inflows for any positive-inflow week year-to-date. This combination of limited demand meeting heavy selling pressure set the backdrop for the massive MMD moves witnessed this week. Visible supply stands at $8.68 billion.

Energy prices added to the week's inflationary tone, with Brent crude opening the week near $89/bbl, reaching a weekly high of $102/bbl on Thursday amid escalating Middle East tensions, before easing to settle at $98.70/bbl on Friday. The SIFMA Municipal Swap Index reset to 1.74%, 36 basis points lower than the prior week.

Cabrera will serve as Co-manager on The Long Island Power Authority’s $946.12 million Electric System General Revenue Bonds, Series 2026B and Series 2026C (Fixed Rate Mandatory Tender Bonds). The three largest transactions of this week include the following:

$1.03 billion Colorado Health Facilities Authority Hospital Revenue Bonds, Series 2026 (AdventHealth Obligated Group) (Tax-Exempt) (Aa2/AA/AA/NR)
$946.12 million Long Island Power Authority Electric System General Revenue Bonds, Series 2026B and Series 2026C (Fixed Rate Mandatory Tender Bonds) (Tax-Exempt) (NR/NR/NR/NR)
$628.95 million Harris County, Texas Permanent Improvement Refunding Bonds, Series 2026A, Unlimited Tax Road Refunding Bonds, Series 2026A, and Permanent Improvement Tax and Revenue Certificates of Obligation, Series 2026A/2026B (Tax-Exempt) (Aaa/NR/NR/AAA)

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