MUNISTREET: Monday May 11, 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

Municipals improved a touch with Treasuries last week, but performance was muted and ratios held steady. While cross market levels may be higher vs. their longer-term averages, ratios’ standard deviations still suggest little urgency from crossover buyers looking for tax-exempt “value” this week.

Overall the week was defined by better volumes, larger average trade sizes (reflecting mutual fund and ETF AUM growth), reduced price volatility (which often eases participant anxiety and allows for more orderly going-away distribution) and improved sentiment from supportive seasonals.

Furthermore, benchmark steadiness, rangebound ratios and better institutional demand have all eased risk management for a street carrying larger balances. But without support from positive momentum, or clear conviction on fundamental/geopolitical resolutions, cautious optimism is still the best argued.

Net customer buying activity was positive all week, and daily trade counts held above their YTD averages. Wednesday alone had $13.0B in customer-buy par with an average trade size of ~$479K — roughly 60% above the YTD average of ~$301K — with Thursday continuing at a similar pace. The latter reflected strong institutional activity tied to reinvestment positioning and better fund/ETF demand.

Price deviations — measuring the speed and magnitude of investment-grade index adjustment — drifted a bit lower, closing the week near zero and still well within a normal/neutral range. So municipal market conditions remain neither technically overbought nor oversold.

2026's daily price movement shows 68% of sessions unchanged — above the long-term average of 60% over the last decade. The −0.25% to −0.15% bucket has produced only 1 session YTD against an average of 17 per year, meaning the latter is apt to occur should means begin to revert. But distributions YTD have still been mostly orderly and normal.

Municipal yield volatility continued to fall from its April highs, and is expected to remain low through the upcoming seasonally supportive months. As volatility eases, so will the concessionary tone in the primary and defensive positioning of dealers.

Mutual fund flows (ICI) reversed four consecutive weeks of outflows — recording +$1.5B (Apr 22) and +$1.3B (Apr 29) — as earlier NAV losses, high price volatility, and geopolitical uncertainty faded enough to generate inflows. For the May 6 week, Lipper reported $1.8B in total flows, driven by long strategies. ETFs have also continued create new shares amid strong Long and Intermediate AUM growth. Meanwhile, tax-exempt money market fund AUM climbed ~$4B, pulling SIFMA ~70bps lower to 2.38%; the latter suggesting some lingering caution despite strong flows for duration elsewhere.

Bids-wanted volume averaged ~$1.0B on a 20-day rolling basis through last week — essentially flat from the prior week and near the YTD average. Mid-week prints ran heavier at $1.2–1.4B before a light Friday. Similar to recent weeks, selling activity was better characterized as opportunistic selling into strength/stability rather than forced liquidations.

Momentum is opening the week neutral; short, intermediate, and long signals all recovered from negative to neutral by Friday, having spent the prior two weeks (Apr 28–May 5) negative. The return to neutral supports more balanced positioning relative to recent sessions — although all three signals need to recover prior to more offensive posturing last seen in early April.

May has historically been the strongest month of Q2, averaging a total return of +0.71% since 2010, and has been positive in 12 of the last 16 years. Over the last 10 years, May has also defined the year's price bottom, after which performance has been strong through Labor Day.

$14.4B priced last week — above the YTD weekly average of ~$10.9B and a step up from the prior week. YTD issuance has reached ~$199B through May 8, running roughly +9.0% above 2025's pace. Forward visible supply stands at ~$19.2B this morning — near last year’s figure but above the last 3yr average. Heavy issuance by itself has not historically pressured prices, but elevated forward volumes do create a more defensive bias, especially as momentum is just recovering and fundamental uncertainty persists.

Expected 30-day reinvestment totals are ~$27.4B this morning — above the comparable levels for 2025 ($21.6B), 2024 ($26.9B), and 2023 ($23.5B) at the same point in the year. Late April and early May represent an accelerating point in the reinvestment calendar, which have supported prices through the spring and summer months.

Credit spreads were essentially flat last week; Baa-AAA closed at 97bps (−1bp WoW) and HY-AAA at 177bps flat WoW). So a week of steady activity — supported by better demand and falling volatility — did little to adjust the current credit context.

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.