Municipal New Issuance: With just four trading days last week due to the Labor Day holiday on Monday, the negotiated calendar totaled to just over $6.5 billion with the largest deal being the $1.5 billion North Texas Tollway Authority. The next largest deal of the week was the $402 million Municipal Electric Authority of Georgia. AmeriVet participated in two deals this past week as a Selling-Group-Member for the $165 million Florida Housing Finance Corporation Homeowner Mortgage Revenue Bond issuance and the $50.5 million New Hampshire Housing Finance Authority Multi-Family Housing Revenue Bonds issuance.

Municipal Secondary Trading: For the first week of trading for September, secondary trading totaled to approximately $31.16 billion for the week with the majority of the trading being done on Thursday ahead of the payroll numbers. With just four days of trading this past week clients bids-wanted as according to Bloomberg totaled to just over $3.6 billion.

Municipal Spreads: For the first week of September muni bond yields fell once again with 10-year notes falling by 7.8 basis points to end the week at 2.62% a year ago yields on 10-year notes were at 2.69%. Although, we did see muni yields fall this past week, they did cheapen compared to Treasuries as the 10-year muni-to-Treasury ratios is now at 70.59% compared to 69.11% from the prior week due to Treasuries continuing to rally as traders are expecting the Fed will cut rates by potentially by 50 basis points. We did see the muni curve flatten this past week by 3.2 basis points to 114 basis points.

According to LSEG Lipper Fund Flows data, investors continued to add to muni bond funds this past week as investors added approximately $956 million to muni bond funds, marking the 10th straight weeks of inflows. The 10th straight week of inflows into muni bond funds comes as investors and the market overall prepares for the Fed to cut rates later this month. Notably, this inflow follows the prior weeks inflow of just over $1 billion.

With everyone now expecting the Fed to cut rates later this month, munis continue to rally this month with the month of September returning .16% bringing year-to-date returns of 1.81%. Despite munis continuing to rally across the curve, we continue to see munis cheapen compared to Treasuries as traders and investors gear up for a Fed Rate cut. The rally in Treasuries has pushed ratios higher across the curve as talk of the Fed easing rates started to gain traction. Since the middle of June of this year, when talk of a Fed rate cute started to gain traction, the 5-year muni-to-Treasury ratio has risen about .45 percentage points to 68.68%. The cheapening is more prevalent belly of the curve as the 10-year muni-to-Treasury ratio has risen by over 3.8 percentage points and the 30-year muni-to-Treasury ratio has risen by over 2.1 percentage points. Muni buyers shouldn’t continue to wait to much longer for the curve to cheapen as since the beginning of May of this year, muni yields have fallen about 75 basis points in the front end of the curve. In the belly of the curve, yields have fallen by a bout 44 basis points and the long end of the curve, yields have fallen by 40 basis points. With a disappointing employment report last Friday and the July revision of non-farm payroll growth, the Fed has been put into a position to cut rates by possibly 50 basis points. This should push muni yields even lower and potentially push ratios back to their average levels.

Municipal Supply: The negotiated calendar for the week will total to just over $11.9 billion, with the largest deal of the week being the $1.6 billion District of Columbia General Obligation and Refunding Bonds issuance. The New York City Transitional Finance Authority plans on issuing $1.5 billion of Future Tax Secured Subordinate Bonds which AmeriVet will be participating in the Selling-Group. The State of Illinois will be issuing just over $1 billion in refunding bonds. AmeriVet will be serving as a Co-Manager for the Massachusetts Housing Finance Agency’s Single-Family Housing Revenue Bonds issuance which will issue $124 million in taxable bonds and $24 million in tax-exempt bonds.