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9th March 2026

Municipal market update

Non-farm payroll fell by 92,000 in February, marking an unexpected decline and one of the largest monthly drops since the pandemic, while the unemployment rate edged up to 4.4%. Together, these figures suggest lingering fragility in a labor market that was thought to be stabilizing.

On the supply side, the municipal market is expecting a heavy calendar this week, with over $12 billion of bonds expected to price with supply concentrated in the top three issuances.

Meanwhile, the ongoing U.S.-Iran military conflict continues to push oil prices higher, with crude rising nearly 30% over the week and soaring past $110 per barrel today, marking one of the most significant disruptions to global energy markets in decades. The surge in oil has extended last week’s sell-off in global equities and heightened concerns about potential stagflation in the U.S.

With inflation pressure continuing, Treasury yields climbed, rising 13 to 21 basis points over the week. The municipal market could not remain insulated, with yields increasing 9 to 18 basis points. On the supply side, the municipal market is expecting a heavy calendar this week, with over $12 billion of bonds expected to price with supply concentrated in the top three issuances. Strong inflows continued, however, as investors added another $1.4 billion to municipal funds, representing the fifteenth consecutive week of inflows and bringing the total inflows for 2026 to over $14 billion—nearly double the amount seen during the same period in 2025. The SIFMA Municipal Swap Index reset to 1.54%, down from 1.88% previously.

Expectations for the Federal Reserve’s next rate cut have continued to shift to later in the year, with markets now pricing in only one reduction, likely no earlier than September.

Cabrera will serve on 6 deals this week, including as sole manager on the $36.66 Million El Monte Union High School District 2026 General Obligation Refunding Bonds, and as co-manager on the $2.56 billion DASNY Personal Income Tax Revenue Bonds, $800 million City of Chicago General Obligation Bonds, $432 million University of Connecticut General Obligation Bonds, $232 million Bay Area Toll Authority Toll Bridge Revenue Bonds, and $127 million Buffalo Municipal Water Finance Authority Water Revenue Bonds.

This week’s three largest transactions include:

  • $2.56 billion Dormitory Authority of the State of New York State (DASNY) Personal Income Tax Revenue Bonds, Series 2026A&B (Aa1/-/-/AAA)

  • $2.39 billion State of California General Obligation and Refunding Bonds (Aa2/AA-/AA/-)

  • $752 million Arkansas Development Finance Authority Environmental Improvement Revenue Bonds, Series 2026A7B (Baa2/BBB/-/-)

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2nd March 2026

Municipal market update

Last Friday’s January Producer Price Index (PPI) came in stronger than expected, rising 0.5% on a seasonally adjusted basis, the largest monthly increase since September last year; on a year-over-year basis, headline PPI increased 2.9%, remaining above the Federal Reserve’s 2% inflation target.

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