Municipal New Issuance: Last week’s negotiated calendar totaled to just over $4.4 billion with the largest deal of the week being the $369 million Massachusetts Educational Finance Authority Taxable issue. The next largest deal of the week was the $279 million City of St. Louis Airport Revenue Bonds issuance followed by the $270 million San Francisco Community College. New issuance for the month of May topped out at approximately $413.95 billion, which is up about 47% from last year, and is the first time since 2016 in which we saw issuance nearing $40 billion for the month of May.

Municipal Secondary Trading: With just four trading days last week due to the Memorial Day holiday on Monday, secondary trading totaled to just over $32.48 billion for the week with 55% of all secondary trades being dealer sells. According to Bloomberg, clients put up roughly $4.91 billion up for the bid, down from the prior week’s total of $5.79 billion due to the markets being closed for the holiday on Monday.

Municipal Spreads: Munis yields rose once again this past week as yields on 10-year notes rose by 10.1 basis points to end the week and month at 3.10%. With the rise in yields for munis once again last week, munis continue to cheapen compared to Treasuries as 10-year munis are now yielding 68.94%, compared to the prior week when the ratio was at 67.30%. We did see the muni curve steepen last week by 4.6 basis points to 64 basis points.

According to LSEG Lipper Global Fund Flows data, for the third straight week in a row, muni bond funds saw investors pull money out of their funds to the tune of about $89 million. This follows the prior week’s outflow of $218 million.

Munis ended the month of May in the red, as munis lost about .29% for the month marking back to back losing months for munis and pushing year-to-date losses to 1.91%. The front end of the curve lost roughly .60% while the belly of the curve lost about 1.18%, and the long end of the curve ending the month with a gain of .40%. With the recent moves in munis, we are continuing to see muni ratios trend higher which is positive for valuations as munis have been stuck for the better part of the past few years. Ratios inside of 10 years are now yielding about 68% and the 30-year ratio is yielding 85.58%. At the start of the year, the 2-year ratio was at 58.80%, the 5-year was yielding 57%, the 10-year was yielding 58.48%, while the 30-year ratio was at 84.46%. With another week of increased supply, we should continue to see pressure in the near-term but with higher yields and muni-to-Treasury ratios cheapening, munis are at attractive levels as yields are at year-to-date highs.

Municipal Supply: For the first week of June, the negotiated calendar will have an expected volume of about $12.6 billion, with the largest deals of the week being the $1.04 billion City of San Antonio Texas Electric and Gas Systems issuance, followed by the $829 million Metropolitan Washington Airports Authority Airport System Revenue and Refunding Bonds issuance. AmeriVet will be in two deals this week as a Co-Manager, the first being the Massachusetts Housing Finance Agency’s $252 million Sustainability Bonds issuance. AmeriVet will also be serving as a Co-Managing underwriter for the State of Connecticut’s General Obligation Bonds issuance which will consist of $250 million in taxable bonds and $200 million in tax-exempt bonds. AmeriVet will also be participating in the Selling-Group for the Commonwealth of Massachusetts $705 million General Obligation Refunding Bonds issuance.