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30th March 2026

Municipal market update

The municipal market continued to be weighed down by geopolitical tensions surrounding the U.S.–Iran conflict, rising oil prices, and a soft Treasury auction – all of which drove volatility across fixed income markets. After an early-week rally tied to a temporary pause in U.S. strikes, markets reversed sharply on Tuesday amid reports that the U.S. may deploy ground forces. Following a poorly received 2-year Treasury auction that same day, yields moved drastically higher with MMD rising anywhere between 7 to 12 bps across the curve. Treasury yields ultimately finished the week modestly higher, with the 10-year at 4.44% and the 2-year around 3.88%, though intraweek swings were significant.

Meanwhile, the SIFMA Municipal Swap Index reset to 2.42%, slightly higher from 2.41% the prior week.

Municipals underperformed Treasuries across the curve, with the MMD AAA scale seeing broad-based cuts particularly on the front end. The municipal primary market also saw weakness, as some issuers faced more cautious investor demand and were forced to price with concessions, contributing to wider spreads and softer secondary performance.

For the first time since November 2025, municipal bond funds saw $600 million in outflows, signaling a shift in investor sentiment. Meanwhile, the SIFMA Municipal Swap Index reset to 2.42%, slightly higher from 2.41% the prior week. Looking ahead, this week investors will remain focused on geopolitical developments as the U.S.-Iran conflict enters its fifth week and monitor the March employment report due for release on Good Friday, a holiday-shortened trading session.

This week Cabrera will serve as co-manager on the fourth largest transaction of the week: $400 million L.A. Department of Water & Power, Power System Revenue Bonds. The three largest transactions include:

  • $1.06 billion Black Belt Energy Gas District Gas Project Rev. Bonds (Baa2/-/-/-)

  • $1.00 billion Texas Municipal Gas Acquisition & Supply Corp. V Gas Supply Rev. Bonds (A3/-/ -/-)

  • $694 million East Bay Municipal Utility District Water System Rev. Bonds (Aaa/AAA/-/-)

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23rd March 2026

Municipal market update

In a widely expected decision, the FOMC held its benchmark interest rates steady as policymakers weighed hotter-than-expected inflation readings, mixed labor market signals, and the evolving conflict with Iran.

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