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7th July 2025

Municipal market update

Following several weeks of negotiation, Congress passed, and the President signed the “One Big Beautiful Bill” (“BBB”), preserving municipal tax exemption and enacting several changes relevant to the public finance sector:

• Spaceports can now be financed with tax-exempt debt • Lowers the minimum PAB requirement for financing Low-Income Housing Tax Credit (LIHTC) from 50% to 25% • Made changes to the Qualified Small Issue Bond rules allowing for R&D expenses to qualify for tax-exempt financing

Despite a shortened week, Municipal LIPPER reached an 8-week high last week with total inflows of $959 million, and MMD significantly overperformed Treasuries. Supply is expected to reach $10.8 billion this week, and the estimated reinvestment remains near its peak at $52.89 billion before dropping again to $27.6 billion in September. Cabrera Capital will serve as Lead Manager on a $495 million Mesquite ISD (Texas) transaction this week. The labor market sent mixed signals last week, with the ADP Employment Report indicating a loss of 33,000 private-sector jobs, while the non-farm payrolls reported a gain of 233,000 jobs. Despite the discrepancy, equity markets responded positively, with the S&P 500 rising 1.21%.

The municipal curve continued to steepen due to moderate bumps in the short to medium range of the curve. The Treasury curve saw a significant increase to the short and medium end of the curve due to fears of high levels of deficit spending, along with persistent inflationary fears. The SIFMA municipal swap index reset to 1.62% from 1.92% the previous week.

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2nd February 2026

Municipal market update

Last Wednesday’s FOMC meeting saw the Committee hold the target range steady at 3.50%–3.75%, as expected.

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