Municipal New Issuance: Last week, the negotiated calendar totaled to just under $11.5 billion with the largest deal being the $1.5 billion New York City Transitional Finance Authority Future Tax Secured Subordinate Bonds issuance which AmeriVet participated in the Selling-Group. The second largest deal of the week was the $1.1 billion State of Illinois General Obligations Bonds issuance. AmeriVet also served as a Co-Managing underwriter this past week for the Massachusetts Housing Finance Agency which issued $124 million in taxable bonds and $24 million in tax-exempt bonds.

Municipal Secondary Trading: Last week, secondary trading totaled to approximately $38.22 billion for the week with the majority of trading being done on Wednesday as many reacted to the CPI numbers released that same day as it could be an indication of how much the Fed would possibly cut rates. According to Bloomberg data, clients bids-wanted last week totaled to just over $4.82 billion with the bulk of the bids-wanted being on Thursday.

Municipal Spreads: Muni yields were relatively unchanged this past week as we gear up for a potential rate cut later this week. This past week, 10-year notes fell by just .1 basis points to end the week at 2.62%. Munis underperformed Treasuries slightly last week as 10-year notes are now yielding 71.80% of Treasuries, compared to the prior week when the ratio was at 70.78%. We did see a slight steepening of the muni curve with the curve steepening by 1.2 basis points to 115 basis points.

Investors continue to add to muni bond funds this past week according the LSEG Lipper Global Fund Flows Data. Last week, investors added approximately $1.3 billion to those muni funds, marking 11 straight weeks of inflows as investors anticipate for the Fed to cut rates later this week. This was the 2^nd largest inflow for the year with the largest being $1.41 billion back in April. This follows the prior weeks inflow of $963 million.

Munis continue to rally as we are just two weeks into the month of September with returns totaling to approximately .68%, bringing total year-to-date returns to 1.99%. This is the highest total return for the year since October 2023 of last year. With the Fed all but certain to cut rates later this week, munis should continue to rally through the month. Although yields continue to be attractive, munis continue to be expensive when you compare munis to Treasuries. The two-year ratio currently stands at 67%, the five-year at 69%, the 10-year at 72%, and the 30-year at 89%. With the expectation that the Fed will cut rates later this week, whether by 25 or 50 basis points, investors who look at relative value in munis should focus on the longer end of the curve.

Municipal Supply: With the Fed expected to announce rate cut later this week, many issuers are taking a pause in issuing until the announcement. The expected negotiated calendar volume will be roughly $3.68 billion for the week, with the largest deal being the $476 million JEA Electric System Revenue Bonds issuance followed by the $314 million Washington State Housing Finance Commission Municipal Certificates (Social Certificates) issuance.