Municipal New Issuance: The third week of February negotiated calendar total is just over $3.9 billion for the week with the largest deal being the $374 million University of Washington taxable and tax-exempt deal, which AmeriVet was a Co-Manager on. The deal was well received by investors as the bonds tightened after its preliminary pricing even as municipal bond yields rose. The second largest deal of the week was the Pennsylvania Housing Finance agency which sold $207 million.

Municipal Secondary Trading: Secondary trading was very active this week with roughly $35.3 billion in secondary trades with 54% of all secondary trades being dealers selling to clients. Customer bids-wanted list continues to be higher than the average weekly total which was just over $4.6 billion down from the prior week of $5.6 billion. We should continue to see higher than average bids-wanted as many investors continue to withdraw money from mutual funds.

Municipal Spread: Municipal bond yields rose once again this week with yields on state and local debt maturing in 10-years is now yielding 1.66%, a 3 basis-point increase from the prior week, a 40 basis-point increase from one month ago, and 60-basis points since the start of the year. With yields rising again this week, they did underperform once again versus Treasuries as 10-year ratios is now 86.62% of Treasuries compared to 84.23% a week ago. At the start of the year those ratios were at 65.21%. Even as yields are rising, we continue to see the yield curve flattening by 5.2 basis points in the past week to 97.5 basis points.

For the fourth time this year, investors pulled cash out of mutual-bond funds with investors pulling about $1.3 billion in the second week. This follows the previous week’s gain of $216 million. With the uncertainty in the markets due to the impending rate hikes as well as geopolitical uncertainty, it comes to no surprise that many investors are sitting on the sidelines until things settle down. High-yield funds saw the largest outflow on record with $776 million being pulled from those funds. Investors have withdrawn over $6 billion from municipal funds year-to-date as many are still sitting on the sidelines until rates become less volatile.

Municipal bonds continue to have a rough start to the year with Bloomberg Municipal bond Index (LMBITR) year-to-date return now at -3.44% with the longer bonds losing the most so far this year with -4.48% in losses so far. The short end of the markets has fared the best bonds maturing in five years and in only down about 2.18% for the year. High-yield funds, which was one of the biggest gainers last year, have had an equally hard time this year with high yield bonds down 3.34% this year, in 2021 they had a year-to-date return of 7.77%. Although municipal bonds are having a rough go around this year, they are still higher than corporate bonds as they are down 5.85% this year. Until we finally see the first rate hike which is expected on March 16th as well as how many rate hikes (4-6 expected hikes) we can see we, should continue to see a volatile market.

Municipal Supply: This week’s negotiated calendar will have a projected volume of $3.4 billion with only one deal being over $1 billion. The drop-in new issue calendar is due to the President’s Day holiday on Monday. The largest deal of the week will be the $1.1 billion Virginia Small Business Financing Authority for the I-495 Hot Lanes Project which will be issuing taxable bonds as well as tax-exempt AMT bonds. The state of Wisconsin will be issuing $357million in taxable and tax-exempt refunding bonds. AmeriVet will in the selling group for two issues this week the $198 million New York City Housing Development Corporation and the $171 million New York State Mortgage Agency Homeowner Mortgage Revenue Bonds.