Municipal New Issuance: Last week, the negotiated calendar totaled to just over $8.1 billion with the largest deal being the $2.5 billion State of California GO deal which AmeriVet participated in the Selling-Group. The second largest deal of the week was the City of Chicago O’Hare Airport which issued $549 million in AMT bonds and $436 million in tax-exempt bonds. The deal saw large demand as yields were bumped by 15 basis points from their initial pricing. AmeriVet also participated  as a Selling-Group-Member for the $58 million Maryland Department of Housing and Community Development Housing Revenue Bonds issuance and the $13 million Minnesota Housing Finance Agency State Appropriation Bonds issuance for Housing Infrastructure. For the month of August, issuance totaled to $49.17 billion for the month, up by about 25% from August 2023 volume. Issuance year-to-date stands at approximately $334 billion, up 33.6% year-over-year.

Municipal Secondary Trading: Last week, secondary trading totaled to approximately $33.50 billion with 54% of trades being dealer sells. According to Bloomberg, clients bids-wanted totaled to just over $4.16 billion, compared to the prior week’s bids-wanted of $4.87 billion.

Municipal Spreads: For the final week of the month of August, muni yields remained slightly unchanged with 10-year notes rising by just .1 basis points to end the month at 2.70% compared to 2.69% just a week ago. At the start of the month of August, the 10-year note was at 2.78%. With the slight rise in muni yields this past week, munis ratios did rise slightly to 69.11%, compared to 70.23% from the prior week, and 68.61% from one month ago. We continue to see the muni curve steepen as the curve steepened this past week by 2.8 basis points to end the month at 117 basis points.

According to LSEG Lipper Fund Flows data, muni bond funds saw investors add about $1 billion to their muni bond funds which follows the prior weeks inflow of $512 million. This inflow marks the ninth consecutive weeks of inflows as investors continue adding to funds ahead of the much anticipated Fed rate cuts later this month.

With August now behind us, munis continued the summer rally with August returning .79% pushing year to date gains to 1.30%. Although munis had a strong rally this summer, munis continue to underperform Treasuries across the curve as ratios have risen in the past two months. At the start of July, the 10-year ratio was at 64.74% and with Treasures rallying, fueled by an anticipated Fed-rate cut this month, we saw 10-year ratio rise above 70% for the first time since November 2023 when the month closed at 69.10%. This under performance is prevalent across the curve, more so in the longer end as the 30-year ratio has risen by over 5 percentage points, while the front end has only seen ratio rise in the same time frame by 2.5 percentage points for the 2-year ratio, and the 5 year ratio by only .05 percentage points. With the Fed all set to cut rates in a few weeks, we should continue to see investors lock in higher rates which will help boost performance this month and bring higher returns for 2024, bucking the trend of weak performance for the month of September which has had negative returns in 7 of the past 10 years.

Municipal Supply: With a shortened Holiday week for the Labor Day Holiday on Monday, the negotiated calendar will have an expected volume of just over $6.6 billion. The largest deal of the week will be the $1.1 billion North Texas Tollway Authority issuance followed by the San Diego Unified School District which is expected to issue $518 million. AmeriVet will be participating in two issues this week as a Selling-Group-Member for the $150 million Florida Housing Finance Corporation and the $50 million New Hampshire Housing Finance Authority.