Monday: April 27, 2026

Municipal Summary | Yields/Ratios/Term Spreads | Trading | Price Deviations | Price Distributions | Volatility | Fund & ETF Flows | Secondary Selling Pressure | Momentum | Seasonals | Supply | Deal Table | Reinvestment | Credit Spreads | Macro/Rate Summary

Municipals outperformed a 5-8 bps rise in Treasury yields by standing still last week; ratios adjusted lower and are reading slightly "rich" by 1-2 standard deviations outside the 10yr maturity. The week's steadiness lowered volatility measures and encouraged better customer buying activity. Meanwhile, bid-wanted volume eased as the calendar was well-distributed and near-term reinvestment/seasonal expectations boosted participant confidence. Still, conditions this morning may be better argued as neutral amid: 1) the loss of positive price momentum in short and intermediate maturities (although the long-end is still clinging to a positive trend), and 2) the forward calendar is climbing back above its last 3-year average while 3) fundamental headlines remain a source of ambiguity.

Ratios fell modestly last week, and on a rolling 30-day basis show more risk than value across the curve. But ratios themselves are not yet rich enough to dissuade institutional cross-over activity, who otherwise see value in high nominals and strong credit quality. The 2s/30s spread closed at 196bps (−3bps WoW) and 2s/10s at 56bps (−2bps WoW) — both consolidating below 200bps and 60bps, respectively, and near their last 3-month average. The curve has added roughly 30bps at 2s/30s YTD, most of which occurred in the first two months of the year. 

Net customer buying activity (by par) was positive most of last week against daily trade counts roughly in line with YTD averages — so it was a week of decent volumes and strong going-away distribution. Wednesday alone had $10.4B in customer-bought par with an implied average trade size of ~$417K — which was 30% above the YTD average size of customer buys - suggesting better institutional activity tied to Long and Intermediate fund inflows reported by Lipper last week. Still, activity for the balance of the week suggested SMAs remained the dominant buyer.

Price deviations — a measure of the speed and magnitude of investment-grade index movement — remained positive last week, closing Friday at a +0.72%, or essentially unchanged WoW. The index has continued to normalize following weakness in March. At +0.72%, the index remains well within a normal/neutral range, reflecting neither a technically overbought or oversold condition.

2026's daily price movement shows 68.8% of sessions unchanged — above the long-run average of 65% over the last decade. Surprisingly, not a single session YTD has fallen in the moderate-negative bucket (−0.25% to −0.15%), compared to a historical average of ~17 days per full year. But the YTD distribution remains orderly, and has effectively reduced some left-tail anxiety ahead of a seasonals supportive period.

Trailing yield volatility fell sharply last week as quieter sessions have continued to help roll-off April's higher values. To the extent price deviations and distributions continue to normalize (as per above), these rolling volatility measures will fall further still. As volatility eases, so does 1) the concessionary tone in the primary market, 2) the defensive positioning of dealers, and 3) the tendency for bid/asks to drift wider. 

Mutual fund flows (as per ICI) have been trending negative for four consecutive weeks — −$218M (Mar 25), −$727M (Apr 1), −$349M (Apr 8), and −$300M (Apr 15) — as earlier NAV losses, high price and geopolitical volatility, and uncertain rate and economic policy have all created enough ambivalence to generate pause. Conversely, ETF inflows were solid at +$1.1B for the week of April 19, and Lipper reported strong Long and Intermediate flows; the latter lagging what has been a strong MTD price advance.  

Bid-wanted volumes averaged ~$1.0B on a 20-day rolling basis through last week — down from ~$1.2B the prior week but still above the $960M–$1.0B range seen in February and early March. Similar to the week prior, selling activity last week was likely better characterized as opportunistic sales into a calm market rather than forced liquidations.

Momentum signals are opening the week mixed; short and intermediate momentum are now neutral while the long-end is positive. The loss of upward momentum for the short and intermediate areas of the curve will result in a relatively more defensive posture this week - at least relative to earlier in the month when momentum was uniformly positive and the market was still bouncing strongly off March's oversold condition.  

April has historically been mixed, averaging a total return of +0.12% since 2010, and has been negative in 5 of the last 7 years, driven by 1) lower reinvestment  2) elevated supply, and 3) tax-related selling. However, the MTD price return of +1.5% has defied those seasonal expectations. Looking ahead, seasonals turn much more supportive in May, where returns have averaged +0.71% over the last decade. May has been the strongest month of Q2 and third strongest of the year.

YTD issuance reached ~$175B through April 24 — running ~14% above the 2025's pace and ~32% above 2024 at the same point in the calendar year. Last week's ~$12.5B was modest, following the heaviest week of the year (i.e., of $17.8B). The forward visible supply has declined to ~$15B but remains a touch above its last 3yr average. 

Expected 30-day reinvestment totals are ~$23.7B this morning — above the comparable levels for 2025 ($18.0B), 2024 ($19.6B), and 2023 ($15.0B) at the same point in the year. Late April represents an accelerating point in the reinvestment calendar, where totals continue to climb over the next ~6–8 weeks. 

Credit spreads held steady last week; Baa-AAA closed at 99bps (−1bp WoW) and the HY-AAA spread at 183bps. So a week of steadiness did little to adjust the current credit context.

Tripp Kaiser is the founder of munistreet, is the executive director of the center on municipal capital markets and is a professor of practice at the LBJ School of Public Affairs at the University of Texas at Austin.