市政债周报：“区间震荡的夏季”让位于“秋季反弹”

Industry Overview 21 August 2026 Key takeaways MunicipalsUnited States •The "range bound Summer" is over; Fall rally should launch with Treasury's long-bondbuybacks the first green light.•A Democratic House win suggests stable-to-lower MMD, supporting reinvestmentdemand and duration extension.•S&P/Moody's 2Q26 combined upgrade to downgrade ratio was 0.7 to 1; highestMoody's multi-notch downgrades since 3Q18. Treasury’s curve twisting move supports market rallyThis week’s events support our call for a reversal and curve flattening. We see the end of the“range bound Summer”and launch of the“Fall rally.”Treasury’s move to doublelong-bond buybacks, engineering a la 2011’s“Operation Twist,”is the first green light.Add duration, position for flattening, and under-hedge. Elections& munis: historical support for firmer muni bid Acrossthe 22 elections since 1982, scenarios where Republicans lose control inCongress saw 10yr AAA MMD rally by 35 days post-election. Samples are narrow withheavy macro overlays, but a Democratic House win suggests stable-to-lower MMD,supporting reinvestment demand and extending duration. Yingchen LiMunicipal Research StrategistBofASyingchen.li@bofa.com Ian RogowMunicipal Research StrategistBofASian.rogow@bofa.com A look at USbanks’ 2Q26 muni holdings US bank balance sheets showed $90.7bn of held-to-maturity (HTM) muni bonds on anamortized cost basis and $190.2bn of available for sale (AFS) munis on a fair value basisas of 2Q26 per the Federal Financial Institutions Examination Council (FFIEC). The dataalso shows US banks hold another $189.4bn of muni loans. John LombardiMunicipal Research StrategistBofASjlombardi3@bofa.com Sophie YanMunicipal Research StrategistBofASsophie.yan@bofa.com 2Q26 rating activity: more downs than upsCombined upgrades from S&P and Moody’s during the 2Q26 were below the combined downgrades, with an upgrade to downgrade ratio of 0.7 to 1. S&P’s activity was morenegative than Moody’s during the quarter. We saw 25 multi-notch downgrades fromMoody’s in 2Q26, the highest since 3Q18’s 27. John ReillyMunicipal Research StrategistBofASjohn.reilly2@bofa.comSee Team Page for List of Analysts Keymarket figures Supply:YTD issuance totals $387.5bn, up 2% y/y. New money is down 5% whilerefundings are up 25% y/y.Rates & ratios:Both the 10yr and 30yr AAA MMD were 7bphigher w/w as of 19 August to 3.31% and 4.52%, respectively; the 10yr muni/Tsy ratiocheapened 2.0ppt w/w to 71.2% and the 30yr ratio cheapened 2.2ppt to 86.9%.Returns:MTD as of 19 August, U0A0 returned 0.41%, underperforming govies,corporates and taxable munis but modestly outperforming HY munis.Spreads:IGspreads unchanged at 13bp w/w as of 19 August. HY spreads unchanged at 153bp.Trade activity:MTD as of 19 August, $117.3bn of muni par value traded in thesecondary, with a daily avg of $9.0bn, up 9.3% m/m and 0.2% y/y. Recent Municipals Research Municipals Weekly: Reversing like October2022? 14 August 2026 Municipals Weekly: Pressure for higheryields remains 07 August 2026 Municipals Weekly: Hedge now, rally later 31July 2026 Municipals Weekly: Reading the muni tealeaves 24 July 2026 BofA Securities does and seeks to do business with issuers covered in its researchreports. As a result, investors should be aware that the firm may have a conflict ofinterest that could affect the objectivity of this report. Investors should consider thisreport as only a single factor in making their investment decision.Refer to important disclosures on page 19 to 21. Municipals Weekly: Supply light, ratios tight17 July 2026 Municipals Weekly: Noise > direction for thesummer 10 July 2026 Exhibit1:Overweight high grades and solid A-rated long duration bonds in 2026Strategic andtactical views & key forecasts Strategic views• (1)High grade bonds, solid A-rated bonds*: overweight in 2026 Tactical views • Go under-hedged as the Fall rally unfolds Key forecasts• 2026 issuance forecast revised down to $600bn; $443bn new money and $157bn of refundings • 2026 principal redemptions forecast revised down to $462bn; coupon payments to total $181bn• Now $138bn net supply expected in 2026. Jun, Jul, Aug and Dec the most favorable supply/demand imbalances• 1s10s and 10s30s should flatten in 2H26• Muni/Tsy ratios will trade at somewhat rich levels most of the time in 2026• Credit spreads for high grades should remain stable in 2H26; could see mild widening in single-As and BBBs Note:*If the holder is certain they are not subject to the AMT under current tax law.Source:BofA Global Research BofA GLOBAL RESEARCH Market views and strategies Treasury’s curve twisting move supports market rallyThis week’s events support our call for a market reversal and flattening of yield curves. Bond futures option market activity over the past several days suggests that the currentround of Treasury bear steepening since mid-June likely reached its climax on Tuesday ofthis week. As such, the“range bound Summer”period that we spoke of si