Municipal New Issuance: With the July 4^th holiday last week, the negotiated calendar was very light with a total volume of just over $333 million. The largest deal of last was the $150 million Massachusetts Development Finance Agency taxable issue for the Tufts Medicine Obligated Group.

Municipal Secondary Trading: For the first week of July, we saw very light trading due to the July 4^th holiday being on Thursday and many taking a long weekend as we only saw roughly $26.95 billion in secondary trading with last Tuesday having the largest volume of trading at $10.22 billion. With secondary trading last week, we also saw very light customer’s bids wanted with just over $3.5 billion in bids-wanted according to Bloomberg.

Municipal Spreads: With the July 4^th holiday on Thursday, munis remained unchanged for the week with 10-year notes ending the week at 2.86%. With munis yields unchanged for this past week, munis did underperform compared to Treasuries as the 10-year muni-to-Treasury ratio is now yielding 66.93% compared to the prior’s weeks ratio which was 65.11%. We did see as the muni curve steepen as well this past week as the curve steepened by 2.3 basis points to 67 basis points.

With the July 4^th Holiday this past week, munis were relatively unchanged with yields rising across the curve on an average of just .2 basis points as traders took a long weekend. With yields for the most part being unchanged this week according to Bloomberg (LMBITR), we did see year-to-date returns inch closer to positive territory with returns sitting at -.34%. With munis being unchanged for the week and unable to keep pace with Treasuries, we did see 2 year munis cheapening by .6 percentage points, 5 year munis by 1.23 percentage points, 10 year munis by .94 percentage points, and the 30 year muni by 1.1 percentage points. We did get FOMC meeting minutes early in the week which did point out that their goal of 2% inflation has been slower than anticipated and that we still would need more evidence to cut rates. However, if we can get any favorable data in the next few months then the Fed could take this opportunity to cut rates ahead of the November election.

Municipal Supply: For the second week of July, the negotiated calendar will have an expected volume of about $6.4 billion with the largest deals of the week being the $720 million City of Houston GO and Public Improvement Refunding Bonds issuance followed by the $625 million Washington Metropolitan Area Transit Authority deal. The University of Washington Hospitals and Clinics Authority plans on selling $301 million in Revenue (Sustainability) bonds.