Municipal Markets Weekly: Wings of the curve are fully valued. 1H26 Liquidity review. State fiscal conditions.

Research evidence excerpt

Municipal Markets Weekly: Wings of the curve are fully valued. 1H26 Liquidity review. State fiscal conditions.

Peter DeGroot AC (1-212) 834-7293 Roisin A Gargan (1-212) 834-7010 Global Markets Strategy J P M O R G A Npeter.degroot@jpmorgan.com roisin.gargan@jpmchase.com

J.P. Morgan Securities LLC J.P. Morgan Securities LLC 10 July 2026

Ye Tian (1-212) 834-3051

ye.tian@jpmorgan.com

J.P. Morgan Securities LLC

Municipal Markets Weekly

Wings of the curve are fully valued. 1H26 Liquidity review.

State fiscal conditions.

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• The limited economic data released this week were broadly stable (PMI/ISM services

surveys and initial claims), though existing home sales pulled back.

• Our rates team sees parallels between today and the late-1990s, implying upside risk

to UST rates if the Fed hikes more than once. However, with front-end yields near

local highs and the next jobs report four weeks away, they prefer 10s/30s flatteners

over outright duration shorts as a lower-beta, relative-value expression of higher yields.

• HG muni yields closed the week higher by 2-4-7-7bps in 2-5-10-30yrs, which, despite

rich valuations, was somewhat surprising to us given a supportive technical back-

drop, including 1H July reinvestment ($37bn), manageable tax-exempt supply

($10bn, -26% vs. 2025), and sustained fund inflows ($1.4bn per LSEG Lipper, bring-

ing YTD inflows to $57bn, the 2nd highest pace for the period ever and a level that

would mark the 3rd highest full-year total on record).