Municipals Weekly: Supply light, ratios tight

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Municipals Weekly: Supply light, ratios tight

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Municipals Weekly

Supply light, ratios tight

Industry Overview

Key takeaways 17 July 2026

Municipals• Fed hike concerns eased this week; Treasuries were elevated but range bound while

United States munis were supported by strong technicals

• Supply remains tight with new money issuance down y/y and refundings up sharply; Table of Contents

AAA curve continued to flatten

Market views and strategies 2• Muni ratios will likely remain rich given strong seasonal demand, substantial

reinvestment flows and muted new money issuance Performance 5

Supply & demand 7

July new money issuance remains low CurveRelative value 89

June inflation data surprised to the downside, reinforcing expectations for a very soft Trade activity 11

June PCE reading and helping ease near-term Fed tightening concerns. Treasury yields Credit corner 12

remain elevated but range bound, while munis continue to benefit from exceptionally

Defaults, distress & HY 17

strong technicals. New-money issuance remains below year-ago levels, and a sharp

Acronyms 19

increase in refundings has further tightened supply conditions amid robust investor

demand. Despite recent Treasury curve steepening, the municipal curve has continued to Research Analysts 24

flatten, driving long-duration outperformance. We see little technical evidence that this

trend is near an end absent a materially steeper Treasury curve. Yingchen Li

Municipal Research Strategist

No meaningful cheapening of muni/Treasury ratios BofASyingchen.li@bofa.com

Muni valuations remain rich despite higher yields, and we see little catalyst for Ian Rogow

meaningful ratio cheapening over the next several months given strong seasonal Municipal Research Strategist

BofAS