MUNISTREET: Monday May 18, 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

Friday's session saw 4–6 bps of benchmark cuts across the curve in a day of broad fixed-income weakness. Broken technical levels, higher inflation readings, and limited progress in the Middle East — in the context of tight credit spreads and record US equity prices — simply became too much for global bond markets to contend with. And with 10yr and 30yr Treasury technical support levels of 4.50% and 5.00%, respectively, now broken, the day-to-day concern has become whether those levels function as buy signals or as a base for further pressure.

For municipals, price momentum is now decidedly negative, weighing on sentiment. Secondary volumes have also varied greatly day to day, challenging price discovery for the benchmark, index, and evaluation businesses. Meanwhile, supply has held to a record YTD pace, adding some distribution pressure despite decent demand from the ETFs, SMAs, and the fund complex. Mutual fund activity has certainly been supportive and even reflective of some reach by retail and institutional accounts for better income and total return opportunities. But with technical levels broken and price volatility climbing, participants now view the upcoming seasonal period with more caution.

Looking ahead, stability (or even strength) could emerge if: 1) price momentum stabilizes; 2) selling pressure remains manageable so as not to disrupt going-away distribution of a larger primary calendar; 3) Treasuries also stabilize or begin to rally back toward 4.50% and 5.00% in the 10yr and 30yr spots, respectively; 4) SMA/retail investors chase higher yields as they have many times over the history of the market; and 5) net fund/ETF flows remain positive (or at least don't turn deeply negative).

Importantly, there needs to be enough balance between retail and institutional demand to avert outflow pressure, extreme ratio movement (which would disrupt street risk management efforts), and/or accompanying liquidity problems. It is often a combination of the latter that contribute to periods of severe adversity in the market.

Ratios are opening lower this morning after Friday’s outperformance. Levels outside the 10yr are now -1.0 standard deviation “rich” vs. recent averages, dampening prospects for an institutional cross-over bid to stabilize the current negative price trend this week.

Secondary volumes declined with average trade sizes. Demand remains cautious given the many fundamental events and related Treasury weakness.

Price deviations — which measures the speed and magnitude of investment-grade price changes — drifted from near-zero to a modestly negative −0.43% by Friday. While the month of May has incurred losses, the municipal market is still not reading as technically oversold.

Three of the distribution’s left tail buckets were populated last week; however, there has still been an above average number of unchanged sessions YTD. More large-gain and also moderate loss sessions are expected to occur as means revert.

Municipal yield volatility edged higher last week, but remains on a downward trend and is still well below April’s high.

Lipper reported +$1.3B net fund inflows for the May 13 week — with Long (+$657M) and Intermediate (+$416M) leading — marking the third consecutive positive week. Meanwhile, municipal ETFs also gained AUM in intermediate and long strategies while tax-exempt money fund AUM held to ~$150B SIFMA. So earlier rotations into shorter vehicles may be stabilizing, at least for now.

Bids-wanted levels have also held stable despite benchmark cuts, Treasury losses, high issuance volumes and a small increase in daily price volatility. There simply has not been enough outflow volume from the funds to force secondary liquidations.

Momentum is opening negative across the curve after reversing a neutral condition mid week. Negative price trends have a history of unnerving retail and reducing participant/dealer confidence, resulting in a more concessionary primary market.

The current MTD price loss of -0.72% has thus far defied May’s positive seasonal bias. Until price volatility and momentum stabilize, participants will be reluctant to embrace the seasonally supportive months ahead.

$13.7B priced last week — above the YTD weekly average of ~$10.9B — bringing YTD issuance to ~$212.8B, roughly 16% above 2025's pace. Forward visible supply has also climbed back >$18B this morning, and above last 3yr average of ~$15.6B.

There is $14.6B of issuance expected this week, as per S&P Global.

Reinvestment estimates have plateaued in recent sessions, but are expected to climb again over the next few weeks.

Credit spreads were stable last week, although HY-AAA tightened 3 bps to 174 bps. The latter often occurs during even small/short periods of adversity, as higher-grade/liquid paper is sold into a down market, providing price discovery for the marquee indices.

Tripp Kaiser, CFA, is the founder of MUNISTREET, 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.