Municipals Weekly: Into 2H26: what‘s tracking, what‘s not

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Municipals Weekly: Into 2H26: what‘s tracking, what‘s not

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Municipals Weekly

Into 2H26: what’s tracking, what’s not

Industry Overview

Key takeaways 26 June 2026

Municipals• Revised issuance target of $600bn for 2026 on track; we revise down redemptions to

United States $643bn from $701bn.

• For 2H26, we expect: the muni AAA curve to flatten, the 10yr to hit 2.30%, rich ratios, Table of Contents

stable spreads and overall credit.

Market views and strategies 2• With favorable muni market technicals ahead, we expect munis to outperform

Treasuries in 3Q26. Performance 5

Supply & demand 6

A mid-year check on our forecasts CurveRelative value 78

Our revised issuance target of $600bn for 2026 remains on track. We revised down Trade activity 10

redemptions for 2H26. For the muni AAA curve, both the 1s10s and 10s30s should Credit corner 11

flatten through year end as the Fed is now expected to hike three times in 2026. We

Defaults, distress & HY 15

continue to expect the 10yr AAA to hit the 2.30% area in 2026. Muni/Treasury ratios

Acronyms 16

should remain rich in 2H26. Credit spreads should remain stable and any widening this

year should be quite mild. Credit fundamentals should also remain stable to finish out Research Analysts 21

2026.

Munis should outperform Treasuries in 3Q26 YingchenMunicipal ResearchLi Strategist

BofAS

We expect a favorable supply/demand backdrop in Jul-26 and Aug-26, and even in Sep- yingchen.li@bofa.com

26. So, while muni rates may follow Treasuries directionally during the summer months, Ian Rogow

they are unlikely to do so in concert. We expect munis to outperform Treasuries over the Municipal Research Strategist

3Q, though we are less certain of munis performance relative to corporates. ian.rogow@bofa.com