Municipal Markets Weekly: Wings still rich, belly cheap. Flows decelerate. Supply manageable next week before August surge. SMA and ETF capital origins.

Research evidence excerpt

Municipal Markets Weekly: Wings still rich, belly cheap. Flows decelerate. Supply manageable next week before August surge. SMA and ETF capital origins.

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 24 July 2026

Ye Tian (1-212) 834-3051

ye.tian@jpmorgan.com

J.P. Morgan Securities LLC

Municipal Markets Weekly

Wings still rich, belly cheap. Flows decelerate. Supply

manageable next week before August surge. SMA and ETF

capital origins.

• Weekly jobless claims fell to their lowest level since 1969 and July flash PMIs

improved in an otherwise quiet week for data. Next week brings a busier calendar and

a live Fed debate, though we expect the Committee to remain on hold.

• Our rates team sees scope for Treasury yields to move modestly higher from here,

even if the Fed remains on hold, but would not chase the bearish impulse. They enter

5s/30s flatteners, while remaining mindful that a dovish Fed and/or any significant

change to Treasury’s forward guidance could push the curve steeper.

• Next week, tax-exempt supply looks manageable at $7.2bn (vs. $12.3bn last year, or

0.8x the last 5 Fed week avg.). This should ease the pressure on BWICs, which rose by

42% this week vs. the 5-week average.

• Beyond next week, we expect heavy August supply will be priced to clear the market,

despite solid reinvestment capital, as heavy dealer balances are likely to remain. Addi-

tionally, the direction and magnitude of UST rate change is likely to play an even more

pivotal role than usual in muni market liquidity, given the recent deceleration in fund

flow momentum.