MUNISTREET: Monday May 4, 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 struggled last week, cutting benchmarks 6-13 bps across a flatter curve. A bounce higher in Treasury volatility mid-week (despite still being way off its March highs), along with the plethora of fundamental headlines (i.e., namely the FOMC meeting, but also Iran, PCE, consumer confidence, personal spending and savings, private payrolls and GDP data, among others) generated pause. As a result, volumes declined, risk management was challenged, money moved to shorter duration strategies/vehicles and tax-exempts underperformed.

The good news: ratios are opening cheaper and at relatively “normal” cross-market levels this morning, the primary calendar has been well received (although its growing), selling pressure has been contained (via the absence of fund outflows, but also via a generally more patient municipal investor at intermediate taxable equivalent yields still near 5.0%), and seasonals have turned much more positive. But fundamentals still remain highly ambiguous while rate volatility is bouncing higher; meaning, especially without positive price momentum, the municipal market is still hard to embrace with conviction near-term.

Yields and ratios both moved higher last week; the former by a more meaningful 6-13bps across a flatter curve, but the latter by only 1-2 ratios inside 10yrs - suggesting moderate cross-market interest in the week ahead (i.e., at least for maturities outside the very earliest). Term spreads also narrowed across the curve last week: 2s/10s by 4bps and 2s/30s by 8bps. Municipals have contended with so many fundamental forces this year, and each has nudged the curve a bit differently.

Net customer buying was positive against daily trade counts roughly in line with YTD averages. But it was still a week defined by lower volumes and cautious bidding. Average trade sizes also ran roughly 10% below their 6-month average all week, reflecting decent SMA distribution but an absence of institutional demand to support better price discovery and total return. So demand was better characterized as opportunistic retail for better incremental income vs. institutional conviction for total return prospects.

Price deviations - measuring the speed and magnitude or daily price movement - drifted a bit lower last week amid the benchmark yield cuts; but valuations are still in a normal range and not reflective of an oversold or overbought market.

68% of 2026’s YTD sessions have finished unchanged — above the long-run average of 60% over the last decade. Notably, the first moderate-negative session (−0.25% to −0.15%) of the year was recorded last week. But the YTD distribution still remains orderly, and the “normal” character of the tails has reduced at least some anxiety related managing municipal risk.

Price volatility measures bounced higher given the mid-week losses, but are still well off their late March/early April highs and are expected to remain below average during the seasonally supportive months ahead.

Mutual fund flows (as per ICI) returned to positive at +$1,527M for the week ending April 22 — snapping a four week outflow streak (−$218M, −$727M, −$349M, −$300M). However, the intensity of fundamental headlines and economic data releases last week did result in money moving into shorter strategies at a faster pace; noting the increased AUM across tax-exempt mutuals, ETFs and money market funds (i.e., with the latter driving SIFMA ~50bps lower to near 3.00%).

Bid-wanted volumes averaged ~$1.0B on a 20-day rolling basis through last week — continuing to ease from the ~$1.2B peak two weeks ago and now approaching the $960M–$1.0B range seen in February and early March. Sell pressure has been contained and manageable so far this year, even at its peak.

Momentum is opening negative across the curve, having shifted from a mix of positive/neutral to fully negative over the past two weeks. Negative momentum will create a more defensive dealer and a less interested buyer, at least relative to three weeks ago when trends were uniformly positive and the market was still bouncing off March's near oversold condition.

The month of May has historically been one of the strongest of the calendar year, assisted by strong reinvestment activity. Over the last 10 years, May has also defined a year’s price bottom, after which performance has been strong through Labor Day. Lastly, the combination of favorable supply/demand and strong returns has reduced May's daily price volatility in recent years.

Last week’s issuance of $9.8B was (barely) below the YTD weekly average, but increases to $12.5B (or 20% above 2026’s weekly average) this week. The forward visible figure has also climbed to $17.8B this morning and is above the prior 3yr average. Heavy issuance by itself has not historically pressured prices, but large volumes do create a more defensive posture; especially when price momentum is negative and fundamentals uncertain.

Expected 30-day reinvestment totals are ~$25.8B this morning — above the comparable levels for 2025 ($18.8B), 2024 ($23.8B), and 2023 ($20.3B) at the same point in the year. Early May marks the beginning of peak reinvestment season, where totals continue to climb over the next ~4–6 weeks. The latter has historically supported prices through the late spring and summer months.

IG spreads held steady while HY narrowed ~6 bps to the AAA index over the last week; the latter occurring not via an improved credit context but rather a sharper/cheaper high-grade vs. high-yield response to the week’s adversity, especially as lower volumes limited price discovery.

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.