Municipals were little changed Friday, as U.S. Treasury yields rose and equities ended up at the close.

Friday’s jobs report saw the economy add 151,000 jobs in February and “early market reaction to the report continued the risk-off trading from Thursday with U.S. equity futures pointing lower and Treasuries seeing a bid,” said Scott Anderson, chief U.S. economist and managing director at BMO Economics.

It “was a mushy report, but not a terrible one,” said Chris Low, chief economist at FHN Financial, soon after the report “which is why bond yields are falling but not tanking.”

However, in the afternoon, Federal Reserve Chair Jerome Powell reassured the market the economy is resilient despite uncertainties. Additionally, he noted the central bank maintains no rate changes are imminent.

This reassurance led U.S. Treasuries to erase gains and end the trading session Friday weaker, while it allowed stocks to rebound.

The two-year municipal to UST ratio Friday was at 64%, the five-year at 66%, the 10-year at 69% and the 30-year at 88%, according to Municipal Market Data’s 3 p.m. EST read. ICE Data Services had the two-year at 65%, the five-year at 66%, the 10-year at 69% and the 30-year at 86% at 4 p.m.

“March is not an overly positive month for munis, but a lot will depend on U.S. Treasuries,” said Barclays strategist Mikhail Foux.

USTs have risen up to 17 basis points this week, but tax-exempts “severely underperformed” on Thursday, and the market still feels “rather heavy,” he said.

Supply has been absorbed “relatively well thus far,” but March is expected to be a robust supply month, Foux said.

Volume will be around $40 billion, with “net positive issuance more than $20 billion, as both redemptions and coupon payments this month should be quite low,” he said.

Therefore, it is difficult to be “overly positive on the market, especially on longer-dated bonds that have clearly underperformed, due partly to heavy supply of longer-dated bonds,” Foux said.

Supported by the UST rally, the yield of the investment-grade index has dropped about 20 basis points year-to-date, while longer-dated IG yields have “barely moved,” he said.

That contrasts with high yield, where “longer-dated bonds have outperformed the index by 5-7 bps this year, showing the underlying strength of that maturity bucket,” Foux said.

As a result, he noted, “the yield differential between the IG and HY indices has moved in the opposite directions for the indices and for longer-dated bonds.”

“Looking ahead, if the U.S. economy continues exhibiting weakness, rates will likely decline, but tax-exempts will probably lag, as the market’s performance will likely be hampered by poor technicals, Foux said.

However, in this case, the market would at least see positive returns and higher ratios would likely bring more investors, he said.

If rates do not come down, Foux expects the market to remain “quite choppy.”

New-issue calendar
Issuance for the week of March is at $10.441 billion, with $7.631 billion of negotiated deals and $2.81 billion of competitive deals on tap.

The New York City Transitional Finance Authority leads the negotiated calendar with $1.5 billion of future tax secured tax-exempt subordinate bonds, followed by the Black Belt Energy Gas District with $913.95 million of gas project revenue bonds.

The competitive calendar is Illinois with $725 million of junior obligation Build Illinois Bonds in three series.

AAA scales
MMD’s scale was unchanged: The one-year was at 2.54% and 2.56% in two years. The five-year was at 2.71%, the 10-year at 2.96% and the 30-year at 4.05% at 3 p.m.

The ICE AAA yield curve saw was cut up to a basis point in spots: 2.58% (+1) in 2026 and 2.57% (unch) in 2027. The five-year was at 2.70% (unch), the 10-year was at 2.95% (unch) and the 30-year was at 3.94% (+1) at 4 p.m.

The S&P Global Market Intelligence municipal curve was little changed: The one-year was at 2.58% (unch) in 2025 and 2.59% (unch) in 2026. The five-year was at 2.68% (unch), the 10-year was at 2.96% (unch) and the 30-year yield was at 3.94% (-1) at 4 p.m.

Bloomberg BVAL was unchanged: 2.49% in 2025 and 2.56% in 2026. The five-year at 2.68%, the 10-year at 2.94% and the 30-year at 3.97% at 4 p.m.

Treasuries were weaker.

The two-year UST was yielding 3.987% (+3), the three-year was at 4.00% (+3), the five-year at 4.085% (+3), the 10-year at 4.312% (+3), the 20-year at 4.656% (+4) and the 30-year at 4.613% (+3) near the close.

Non-farm payrolls
Economists viewed the February employment report as offering something to please everyone … while also displeasing observers.

After January’s weather issues, FHN’s Low said, “February was a rebound month,” which turned out “quite unimpressive from that standpoint.”

While the report was “lackluster” overall, Low said, “volatility in late 2024 still clouds the picture, but post-election euphoria boosting November and December hiring has faded.”

“The market’s worst fears for this morning’s jobs report were not realized,” said BMO Economic’s Anderson. “The official BLS employment report for February showed relatively calm labor market waters continued to hold last month, but with some turbulence brewing below the surface.”

Still, the report doesn’t change the likelihood the Federal Open Market Committee will keep rates in a range between 4.25% and 4.50% at its March meeting, he said.

The numbers provide “zero clarity for bond investors,” noted Bryce Doty, senior vice president and senior portfolio manager at Sit Investment Associates. “You can argue the Fed will keep rates high, or you could say this report means they may need to cut sooner than previously expected.”

The report was “neutral to somewhat good news for markets” at first, said Wells Fargo Investment Institute Senior Global Market Strategist Scott Wren. “The yield on the 10-year Treasury ticked slightly lower to 4.25% as average hourly earnings came in slightly weaker than expected, which is good news for the Fed.”

The Fed will stay “cautious” this year, he said, noting, “in our view, the market is overestimating the potential for rate cuts this year. Wage pressure is a key factor the Fed will consider in its decision-making process and would likely be more comfortable if average hourly earnings [year-over-year] were below 4%.”

Wells sees gradual deceleration in the jobs market in the “coming month/quarters” and markets to remain volatile.

“This report tells the Fed that they still need to be careful as sticky housing/shelter/wage data shows it won’t be easy to engineer meaningfully lower inflation from current levels in the near term,” Wren said.

But the Fed’s decision won’t be easy, according to Wells Fargo Securities senior economists Sarah House and Michael Pugliese and economist Nicole Cervi. “Optimism about a labor market acceleration has faded amid cooler economic data, deteriorating sentiment and the rising probability of a major trade war. When viewed in isolation, this argues for a dovish tilt from the Committee at its upcoming meeting.”

But inflation remains a half point above the Fed’s target and tariffs could lift inflation and inflation expectations, they noted. “The Committee may feel constrained in its ability to act preemptively to stave off further labor market softness.”

The Wells Fargo economists expect no change this meeting and for the Summary of Economic Projections to forecast two rate cuts this year, noting, “the Committee is well-positioned to adjust monetary policy in either direction, as needed.”

Investors can’t “draw any big conclusions” from the report, said Natalia Lojevsky, managing director at CIFC Asset Management. Despite the miss in the headline number, she said, “the report is not as bad as many had feared [and is] still OK for credit.”

But “tariff volatility is significant and looks like it will take a while to play out,” Lojevsky noted.

Calling the report “mixed at best,” Byron Anderson, head of fixed income at Laffer Tengler Investments, said, “We are not putting much stock in the jobs report at the moment.”

The market needs clarity on the economy, which is missing amid “the Trump turmoil,” he said. “The longer we have chaos and turmoil from [President Donald] Trump, the higher the probability that we will eventually have data trend negative. Markets, businesses and consumers do not like uncertainty and that means increased volatility.”

Jack McIntyre, a portfolio manager at Brandywine Global, called this “one of those rare Goldilocks-type of economic reports. There’s something for everyone.”

It calms fears about growth and inflation, “which is good for both bonds and stocks,” he noted. “There is a fair chance that the February report is one of the strongest of the year as fiscal constraint, immigration contraction and elevated levels of uncertainty keep the private sector from hiring aggressively over the course of 2025.”

Although the data didn’t “reveal some deeply unsettling news around the health of the labor market,” as feared, Seema Shah, chief global strategist at Principal Asset Management, it confirms “the labor market is cooling and that it may require some assistance from the Fed in the coming months.”

And given the “headwinds confronting the U.S. economy, the softening trend is likely to persist and may potentially deepen given the toxic combination of federal government layoffs, public spending cuts and tariff uncertainty related inertia,” she said.

Echoing that the report “wasn’t as bad as feared,” Lindsay Rosner, head of multi sector fixed income investing at Goldman Sachs Asset Management, said the rise in the unemployment rate justifies “the momentum that’s been building for a resumption in the Fed’s cutting cycle.”

By itself, the report won’t change Fed policy decisions, said Ameriprise Chief Economist Russell Price. “However, further moderation in the number of jobs created each month could cumulatively lead to heightened concerns for economic growth over inflation in the months ahead — thus hiking expectations for Fed fund rate cuts,” he said.

“I don’t think there’s anything that prompts the Fed to take a particular action in the near term,” said Sean Snaith, director of the University of Central Florida’s Institute for Economic Forecasting. “So, we’re just waiting for the dust to settle, policy-wise, before we can get a better view of where we might be headed.”

Primary to come
The New York City Transitional Finance Authority (Aa1/AAA/AAA/) is set to price Wednesday $1.5 billion of future tax secured tax-exempt subordinate bonds, Fiscal 2025 Series H, Subseries H-1, serials 2026-2052. Wells Fargo.

The Black Belt Energy Gas District (Baa1/NR/NR/NR/) is set to price $913.95 million of gas project revenue bonds, 2025 Series B. Goldman Sachs.

The Board of Regents of the University of Texas System (Aaa/AAA/AAA/) is set to price Thursday $650 million of permanent university fund bonds, Series 2025A. Jefferies.

Ohio (Aaa///) is set to price Tuesday $500 million GOs, consisting of $300 million of common schools GOs, Series 2025A, serials 2026-2044, and $200 million of infrastructure improvement GOs, Series 2025A, serials 2026-2044. RBC Capital Markets.

The Massachusetts Development Finance Agency (Aa3/AA-/NR/NR/) is set to price Tuesday $377.22 million of Boston College issue revenue refunding bonds, Series W, serials 2026-2042, terms 2057, 2057. Barclays.

The Stamford Housing Authority is set to price Wednesday $347.665 million of Mozaic Concierge Living Project revenue bonds, consisting of $155.996 million of Series A, $29.615 million of Series B, $61.45 million of Series C, $98.89 million of Series D and $1.755 million of Series E. HJ Sims.

Northwestern University (Aa1/AA+/NR/NR/) is set to price Tuesday $300 million of taxable corporate CUSIPS. Barclays.

The New York City Housing Development Corp. (Aa2/AA+//) is set to price Tuesday $242.82 million of sustainable development multi-family housing revenue bonds, consisting of $135.095 million of Series A-1, serials 2030-2037, terms 2040, 2045, 2050, 2055, 2060, 2064, and $107.725 million of Series A-2, term 2064. Loop Capital Markets.

Miami-Dade County, Florida, (Aa2//AA+/) is set to price Tuesday $220.535 million of Jackson Health System public facilities revenue and revenue refunding bonds, serials 2026-2036, 2040-2055. PNC Capital Markets.

The Desert Sands Unified School District, California, (Aa2/AA//) is set to price Tuesday $200.24 million of GOs, consisting of $150 million of Election of 2024 GOs and $50.24 million of refunding GOs. Piper Sandler.

The Public Finance Authority, Wisconsin, is set to price Tuesday $196.176 million of non-rated Texas Infrastructure Authority Program tax-exempt revenue anticipation improvement and refunding bonds. Piper Sandler.

Louisiana (Aa2/AA//AA/) is set to price Tuesday $179.07 million of GO refunding bonds, Series 2025-A, serials 2025-2037. Raymond James.

Acts Retirement-Life Communities Obligated Group (//A-/) is set to price Tuesday $161.61 million of revenue bonds, consisting of $99.445 million of Series 2025A and $52.165 million of Series 2025B. Ziegler.

The Toledo Lucas County Public Library, Ohio, (Aa2///) is set to price Tuesday $153 million of unlimited tax GO library improvement bonds, consisting of $80 million of Series 2025A bonds, serial, 2044, term 2049, 2054, and $73 million of taxable, serials 2025-2044. Stifel.

The Utah Housing Corp. (Aa2/NR/NR/NR/) is set to price Tuesday $140 million of taxable single-family mortgage bonds, 2025 Series D, serials 2026-2037, terms 2040, 2045, 2050, 2055, 2055. Jefferies.

The Green Bay Area Public School District, Wisconsin, is set to price Monday $136.175 million of GO promissory notes, consisting of $97.565 million of tax-exempts (Aa2///), serials 2027-2034, and $38.61 million of non-rate taxables, serial 2026. Baird.

Wisconsin (NR/AAA/NR/AAA/) is set to price Tuesday $124.375 million of transportation revenue refunding bonds, 2025 Series 1. Jefferies.

The Public Finance Authority is set to price Wednesday $102.33 million of KSU Bixby Real Estate Foundation Project student housing revenue bonds, consisting of $55.43 million of Series 2025A (Baa1///), serials 2025-2040, terms 2045, 2050, 2055; $27.245 million of Series 2025B (Baa2///), serials 2030, 2035, 2045, 2055; and $19.655 million of Series 2025C (Ba1///), serials 2035, 2045, 2055. Raymond James.

Texas (Aaa///) is set to price Tuesday $100 million of taxable veterans land bonds, Series 2025A, term 2056. Jefferies.

Competitive
Illinois is set to sell $725 million of junior obligation Build Illinois Bonds in three series, consisting of $276 million of Series A of March 2025 at 10:45 a.m. Tuesday, $231 million of Series B of March 2025 at 11:45 a.m. Tuesday, and $218 million of Series C of March 2025 at 11:15 a.m. Tuesday.

The Triborough Bridge and Tunnel Authority is set to sell $400 million of payroll mobility tax bond anticipation notes, Series 2025A, at noon Tuesday.

Baltimore County is set to sell $179 million GO metropolitan district bonds (86th Issue) at 10:30 a.m. Tuesday, $168 million of GO consolidated public improvement bonds at 11 a.m. Tuesday.

The county is also set to sell $125 million of Equipment Acquisition Program certificates of participation at 11:30 a.m. Tuesday.

Hayward, California, is set to sell $125 million of 2025 wastewater revenue bonds at noon Tuesday.

The Kansas Development Finance Authority is set to sell $167.15 million of tax-exempt and taxable athletics facilities revenue bonds, at 10:30 a.m. Thursday.

Mercer County, New Jersey, is set to sell $139.91 million of bond anticipation notes, Series 2025A, at 11 a.m. Thursday.