Municipal Summary
Municipals steadied Friday morning on lower volumes and range-bound Treasuries. On the week, tax-exempts bear flattened and lost their upward price trend, hurting sentiment into an otherwise strong seasonal period.
Secondary Breaks (4/17-4/30 Data Only)
General: Over the last 10 sessions (4/17–4/30), secondary breaks averaged -1 bp through originals across 500+ trades, with 63% breaking to lower yields after adjusting for AAA movement between sale and trade date.
Offering type: Negotiated deals broke -1 bps through originals vs. 0 bps for competitive sales; the latter consistent with longer-term historical averages, but the former narrowing vs. a -4 bps longer-term average. 72% of negotiated trades and 52% of competitive trades broke to lower yields over the period.
Maturity: Short maturity breaks were largely flat while the long-end broke to lower yields; the latter averaging -3 to -6 bps through originals and reflecting the additional challenges with distributing duration amid tepid fund demand.
Sector: Select revenue sectors broke to lower yields: healthcare (-3 bps, a sector that has been borrowing/issuing at a high pace YTD), utilities (-3 bps), and education (-2 bps). General government (+0.6 bps) and housing (+0.7 bps) broke to slightly higher yields.
Rating: Breaks by rating were mixed on high-grade structures but broke more consistently to lower yields as credit quality worsened - typical behavior.
Deal Size: Also consistent with history, larger-sized deals broke by wider disparities when becoming free to trade in the secondary. Without larger fund inflows or a better institutional demand presence, larger transactions are more challenging to distribute, thus requiring a bit more primary market concession.
Deal Table
$12.8B is expected to price in the primary next week (S&P data).
Macro/Rate Summary
Q1 GDP +2.0% annualized, driven by AI-related investment.
Atlanta Fed initial Q2 GDPNow at 3.7%; Pantheon expects sharp Q2 deceleration.
Nominal personal spending jumped in line with consensus, real spending softer; savings rate fell further to 3.6% (from 5.1% earlier this administration per UBS).
Core PCE +0.29% month-over-month, in line.
Initial jobless claims fell to 189K; drop partly reflects sharp NY reversal/seasonal adjustment quirks; continuing claims also fell more than expected.
FOMC held rates; four dissents — most since 1992 (Miran for a 25bp cut; Hammack, Kashkari, Logan against including an easing bias in the statement).
Market repriced from 3bps of hikes to 3bps of cuts for December meeting after FOMC.
BMO: US rates "almost entirely a function of oil prices"; 10s back below 4.40% and 2s below 3.90% as WTI faded after touching $110; flags weekend Middle East event risk.
Barclays strategist favors front-end (2s) — Fed unlikely to hike, fair entry given momentum already turned bullish.
Morgan Stanley: 2Y/3Y/5Y CPI swaps look rich vs historical beta to 1Y CPI — oil persistence premium priced in; 10Y beta-breakevens look rich; maintains long 5Y TIPS as higher inflation improves carry.
ING: investment linked to tech and AI is now the main engine of US growth; durable goods orders suggest trend continues but breadth is lacking.
ABN AMRO: four FOMC dissents make Powell's last meeting his most divided, complicating consensus-building for Warsh.
UBS: market-determined prices ex-energy rose notably in March (lingering tariffs plus airfares with embedded energy); will give ammo to Fed hawks.
Yardeni: corporate earnings hitting new highs alongside the index; homemade real GDP model shows growth picked up in March/April.
AAA: national average gas price +27 cents in one week, $1.12 above year-ago, highest since late July 2022.
May has historically been the largest outflow month for equity funds and ETFs.
S&P 500 +10.5% total return in April, best month since November 2020; Philly semiconductor index +38.4%, best since February 2000; MSCI EM +14.7%, best since November 2022.
Only 3% of companies have lowered guidance this earnings season vs. 8% decade average.
ECB held at 2% unanimously, but Lagarde revealed a hike was discussed — hawkish tilt; markets dialed back hike pricing for year-end -10.6bps to 73bps.
BoE held at 3.75% in 8-1 vote (Pill dissented for 25bp hike); characterized as an "active hold."
Euro area headline inflation rose to 3% YoY on energy spike; core down 10bps to 2.2% but sequential momentum strengthened.
Yen surged most in 3+ years on reported official intervention via dollar sales; DXY had largest one-day drop since August 2025 at month-end.
Tripp Kaiser is the founder of munistreet, the executive director of the center on municipal capital markets and a professor of practice at the LBJ School of Public Affairs at the University of Texas at Austin.