J.P. Morgan Municipal Morning Intelligence

Research evidence excerpt

J P M O R G A N

Global Markets Strategy

16 September 2026

J.P. Morgan Municipal Morning

Intelligence

Sell low vol with muni TEY at multi-decade highs in the

belly and long end.

Tax-Exempt Market Wrap

– The HG muni scale was cut by 3-4bp across the curve yesterday on a day of heavy

issuance ($6.7bn). In the backdrop, Treasury yields rose by 3-4bp, muni fund flows

managed to stay in positive territory (with open-ends’ outflows offset by strong ETF

inflows), and BWIC volume remained elevated ($4.6bn, +53% vs. the five-week

same-day avg.), as investors await today’s FOMC meeting, where we expect the Fed

to raise rates by 25bp in the first hike since the summer of 2023 (see FOMC Preview,

Michael Feroli, 9/11/26).

– We expect that mid-month September reinvestment (albeit a modest $9bn),

slowdown in issuance and compelling valuation in munis, should provide

support to munis and that 5% absolute rates should gradually attract capital from

traditional investors at the longer portions of the curve. Investors may look to sell their

low-beta holdings to fund new issues and secondary purchases where indicated by

wider spreads (see 1/10/2026 publication).

– Yesterday’s BWIC volume was $4.6bn, 53% above the five-week average, with

a surge in 10-20yrs (+91%). The hit ratio was a stable 57%, 3% above average.

Traded yields on customer purchases were mostly 2-3bp cheaper to ICE marks in

1-20yr, while trades were 1-2bp through in short-calls and 20yr+ spots.

– Muni fund flows managed to stay in positive territory yesterday as tax trades

continued, totaling $474mn on the day, driven entirely by ETFs ($693mn total/

active strategies -$9mn/passive +$701mn). Meanwhile, open-end funds continued

to register outflows of $219mn, for the fifth consecutive session.

Figure 1: Trailing 20-session estimated fund

flow

Figure 2: Daily municipal fund flow

observations

Municipal fund flows ($mn)

1500

Trailing 20 session JPM estimated fund flow

ETF Flow

1000

Open-end Flow

20 Day Avg

500

0

-500

All Muni

Open-end

ETF

Active ETF

Passive ETF

HY Muni

Open-end

ETF

LT Muni

Open-end

ETF

1 Day Flow

474

-219

693

-9

701

-144

-149

5

352

-176

529

3 Day Flow

887

-1,225

2,112

267

1,844

-338

-499

161

354

-1,052

…