Municipals Weekly: Noise > direction for the summer

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Municipals Weekly: Noise > direction for the summer

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Municipals Weekly

Noise > direction for the summer

Industry Overview

Key takeaways 10 July 2026

Municipals• Rates should be rangebound despite this week's selloff; long-end pressure & renewed

United States 10s30s steepening are the bigger risks.

• 1H26 issuance indicates that issuers might be starting to consolidate balance sheets Table of Contents

after years of rapid expansion.

Market views and strategies 2• Tolls & Turnpikes and Transportation have generally outperformed the Muni Master

index historically over the summer. Performance 6

Supply & demand 8

More noise than direction this summer CurveRelative value 109

June service data and geopolitical risks pushed the 10yr Treasury back above 4.50%, but Trade activity 12

we still view rates as range-bound, with likely more noise than direction this summer. Credit corner 13

The bigger risk is long-end pressure and renewed 10s30s steepening. Munis finally

Defaults, distress & HY 16

cheapened modestly, though ratios stayed rich on strong July technicals. While muni

Acronyms 17

demand should remain supportive, some long-end hedging looks prudent at this point.

Research Analysts 22

Issuers consolidating their balance sheets?

1H26 issuance confirms a sharper-than-expected shift in issuer behavior: new money fell Yingchen Li

2% y/y, while refundings rose 29%, suggesting some issuers are beginning to Municipal Research Strategist

BofAS

consolidate balance sheets after several years of rapid expansion. If continued, net yingchen.li@bofa.com

supply should be lower than expected – supportive for munis. Transportation and Ian Rogow

Education saw large declines of new financing; Electric Power and Utilities grew. Municipal Research Strategist

ian.rogow@bofa.com