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6th July 2026

Municipal market update

Municipal bonds outperformed last week despite the volatility in the Treasury market following the June employment report, which showed the unemployment rate declining to 4.2% and reinforced uncertainty around the Fed's policy path.

The SIFMA Municipal Swap Index reset to 1.64%, 103 basis points below the prior week.

With inflation remaining elevated and labor market conditions still relatively firm, the Fed will need to continue balancing its dual mandate of price stability and maximum employment. At the same time, Brent crude has fallen to approximately $72 per barrel from highs near $113 per barrel, which could help moderate inflationary pressures if lower energy costs continue to work their way through the economy. Last week was also a shortened trading week due to the July 4th holiday, which marked the 250th anniversary of American independence.

Looking ahead, Munis are expected to continue performing well as July reinvestment cash continues to outpace supply. Visible supply starts the week at just $10.3 billion, while municipal bond funds recorded approximately $1.7 billion of inflows, providing a supportive technical backdrop. Fund flows remain decisively positive, with YTD net inflows into Munis totaling $31.972 billion and 11 consecutive weeks of positive inflows. YTD there have been only two weeks of net outflows, one of which was tax week, a week that has consistently printed negative over the last 5 years. MMD outperformed UST last week, with both the 5-year and 30-year yields declining 2 bps.

The SIFMA Municipal Swap Index reset to 1.64%, 103 basis points below the prior week.

This week, Cabrera will serve as Co-Manager for California State University’s Systemwide Revenue Bonds, Series 2026A, B1, B2, and B3 (Aa2/AA-/NR/NR), Co-Manager for the Water Replenishment District of Southern California Assessment Revenue Bonds, Series 2026 (NR/AA+/NR/NR), Senior Manager for the City of Kirby Combination Tax and Revenue Certificates of Obligation, Series 2026 (AGM: NR/AA/NR/NR) and Sole Manager for the Successor Agency to the City of Norwalk RDA transaction, Tax Allocation Refunding Bonds, Series 2026A&B (BAM: NR/AA/NR/NR)

The three largest transactions of this week include the following:

  • $1.8 billion California State University’s Systemwide Revenue Bonds, Series 2026A, B1,2,3 (Aa2/AA-/NR/NR)

  • $812 million Massachusetts Port Authority Revenue Bonds, Series 2026A (non-AMT) & 2026B (AMT) (Aa2/AA/AA/NR)

  • $767 million Massachusetts Bay Transportation Authority Senior Sales Tax Bonds, 2026 Series A (NR/AA+/AAA/AAA)

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