Last week, the President signed into law his “Big Beautiful Bill,” which reportedly contains roughly $4.5 trillion in tax cuts, and protects the tax exemption for municipal bonds and private activity bonds. The Bill also creates a new category of private activity bonds for “spaceports” and includes a few additional bond-related provisions. The preservation of the tax-exemption is of critical importance to the municipal bond market.
Strategy and Insights
Muni and Treasury yields moved slightly higher over this past week with the long end of the Treasury curve remaining notable steep. The municipal yield curve steepened with yields dropping roughly 3 basis points per year on the short/short-intermediate potion of the yield curve and climbing by the same magnitude on the long-end with yields pivoting around the 10-year mark. Thursday’s jobs data, released by the Bureau of Labor Statistics, dashed the markets hopes of a July rate cut with nonfarm payroll employment increasing by 147,000 jobs in June, beating the census forecast of 110,000 jobs from economists polled by Dow Jones. Furthermore, the unemployment rate fell slightly from 4.2% to 4.1%. As a result, Treasury yields generally climbed throughout the curve over the past week, with an almost parallel shift upward of 13 to 16-basis points.
This week, municipal issuers are expected to sell more than $12.7 billion of bonds, following last week’s truncated holiday calendar. This supply will likely be met with strong demand following last week’s infusion of $958.89 million to municipal bond mutual funds, as reported by LSEG Lipper Global Fund Flows. In addition, $24.2 billion in municipal bonds are expected to mature in the next 30-days and $4.2 billion in calls have been announced over the next 30-days. Overall, technical conditions in the municipal bond market have been supportive of new issues and we expect this trend to continue.
Herbert J. Sims & Co. Inc. is a SEC registered broker-dealer, a member of FINRA, SIPC. The information contained herein has been prepared based upon publicly available sources believed to be reliable; however, HJ Sims does not warrant its completeness or accuracy and no independent verification has been made as to its accuracy or completeness. The information contained has been prepared and is distributed solely for informational purposes and is not a solicitation or an offer to buy or sell any security or instrument or to participate in any trading or investment strategy, and is subject to change without notice. All investments include risks. Nothing in this message or report constitutes or should be construed to be accounting, tax, investment or legal advice.
July 7, 2025 | Timothy Iltz
Overview
Last week, the President signed into law his “Big Beautiful Bill,” which reportedly contains roughly $4.5 trillion in tax cuts, and protects the tax exemption for municipal bonds and private activity bonds. The Bill also creates a new category of private activity bonds for “spaceports” and includes a few additional bond-related provisions. The preservation of the tax-exemption is of critical importance to the municipal bond market.
Strategy and Insights
Muni and Treasury yields moved slightly higher over this past week with the long end of the Treasury curve remaining notable steep. The municipal yield curve steepened with yields dropping roughly 3 basis points per year on the short/short-intermediate potion of the yield curve and climbing by the same magnitude on the long-end with yields pivoting around the 10-year mark. Thursday’s jobs data, released by the Bureau of Labor Statistics, dashed the markets hopes of a July rate cut with nonfarm payroll employment increasing by 147,000 jobs in June, beating the census forecast of 110,000 jobs from economists polled by Dow Jones. Furthermore, the unemployment rate fell slightly from 4.2% to 4.1%. As a result, Treasury yields generally climbed throughout the curve over the past week, with an almost parallel shift upward of 13 to 16-basis points.
This week, municipal issuers are expected to sell more than $12.7 billion of bonds, following last week’s truncated holiday calendar. This supply will likely be met with strong demand following last week’s infusion of $958.89 million to municipal bond mutual funds, as reported by LSEG Lipper Global Fund Flows. In addition, $24.2 billion in municipal bonds are expected to mature in the next 30-days and $4.2 billion in calls have been announced over the next 30-days. Overall, technical conditions in the municipal bond market have been supportive of new issues and we expect this trend to continue.
Herbert J. Sims & Co. Inc. is a SEC registered broker-dealer, a member of FINRA, SIPC. The information contained herein has been prepared based upon publicly available sources believed to be reliable; however, HJ Sims does not warrant its completeness or accuracy and no independent verification has been made as to its accuracy or completeness. The information contained has been prepared and is distributed solely for informational purposes and is not a solicitation or an offer to buy or sell any security or instrument or to participate in any trading or investment strategy, and is subject to change without notice. All investments include risks. Nothing in this message or report constitutes or should be construed to be accounting, tax, investment or legal advice.