Munis, USTs little changed as FOMC meets

Munis were little changed on Tuesday ahead of the Federal Open Market Committee decision, as U.S. Treasuries were slightly cheaper in spots and equities ended higher.

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Munis richened by up to two basis points, depending on the scale. USTs cheapened by up to two basis points.

The rally in October has been surprising, as was the historic selloff in September, said James Welch, municipal portfolio manager at Principal Asset Management. Anyone who claims they weren’t surprised by the past two months is lying, Welch joked.

“It speaks to this volatility that the asset class has now become a part of,” Welch said of munis. He expects more swings moving forward.

The volatility this year has been largely externally driven, Welch said: the war in Iran, geopolitics and monetary policy. None of those factors have changed, he said.

“What’s been surprising is the inter-asset class volatility, the bid-wanteds at elevation, the reduction somewhat in flows that we saw in September relative to the previous months. So those variables remain in place. So the short answer is yes, volatility will be here. Doesn’t mean the market can’t perform well,” Welch said.

New-issue market
In the primary market Tuesday, BofA Securities priced for the California Health Facilities Financing Authority (Aa3/AA-AA-/) a slightly upsized $1.52 billion of Cedars-Sinai Health System revenue bonds, Series 2026A, with 5s of 8/2027 at 2.69%, 5s of 2031 at 3.14%, 5s of 2036 at 3.62%, 5.25s of 2041 at 4.11%, 5.25s of 2046 at 4.66%, 5.5s of 2051 at 4.86%, 5s of 2056 at 5.06% and 5.5s of 2056 at 4.96%, callable 8/2036.

BofA priced for the Connecticut Housing Finance Authority (Aaa/AAA//) $262.93 million of taxable social housing mortgage finance program bonds, Series 2026E-2, with all bonds priced at par 5.169s of 5/2034, 5.743s of 5/2036, 5.793s of 11/2036, 6.036s of 11/2041 6.277s of 11/2046 except for 6.5s of 5/2057 at 5.659%, callable 11/2034.

In the competitive market, Washington (Aaa/AA+/AA+/) sold $327.38 million of general obligation bonds to J.P. Morgan, with 5s of 2/2027 at 2.62%, 5s of 2031 at 3.01%, 5s of 2036 at 3.48%, 5s of 2041 at 4.10% and 5s of 2042 at 4.25%, callable 2/2037.