Municipal New Issuance: Last week, the negotiated calendar totaled to just over $13 billion with the largest deals of the week being the $1.6 billion Texas Water Development Board State Water Implementation Revenue Fund, followed by the Los Angeles Unified School District which issued $994 million in tax-exempt bonds and $105 million taxable bonds. The State Public Works Board of the State of California issued $795 million in tax-exempt bonds. AmeriVet participated in one issue this past week as a Selling-Group-Member for the $886 million New York City Municipal Water Finance Authority which upsized their deal from its original size of $787 million. September issuance totaled to just under $46 billion, the second highest total for the month since 2013.

Municipal Secondary Trading: Last week, secondary trading totaled to approximately $37.18 billion for the week with majority of the trading being done on Thursday. According to Bloomberg, clients bids-wanted last week totaled to just over $4.82 billion, up from the prior week’s bids-wanted total of $3.9 billion.

Municipal Spreads: Muni yields rose slightly this past week with yields on 10-year notes rising by .6 basis points to 2.63%. Just one month ago, 10-year notes were at 2.69%. With muni yields rising this past week, munis were able to slightly outperform Treasuries as the 10-year muni-to-Treasury ratio is yielding 70.04% of Treasuries, compared to the prior week when the ratio was at 70.12%. With the slight uptick on yields this past week, the muni curve did steepen by 1.8 basis points to 116 basis points.

According the LSEG Lipper Global Fund Flows Data, for the 13^th consecutive week, muni bond funds saw inflows as investors added approximately $592 million to their funds and this follows the prior week’s inflow of $718 million. We should continue to see inflows as investors seek to continue to lock in higher yields if the Fed continues their policy easing approach.

As we head into the fourth quarter of 2024, munis continue to show strength as munis have returned 2.24% so far this year, significantly up from last year as munis were down 1.38% at the end of the third quarter last year. This the first positive third quarter since 2020 and the best since 2011. Munis as well as other fixed income products have taken a complete 180 from last year as the fed held rates at 5.5% until earlier this month when they cut rates by 50 basis points. With the Fed beginning to cut rates, investors will continue to snap up higher yielding bonds while they still can. Since the the Fed cut rates by 50 basis points, munis have richened compared to Treasuries with the 5-year muni ratio improving by about a half a percentage point to 67.58%, the 10- year note by 1.12 percentage points to 70.04%, and 30-year notes by 2.06% percentage points to 86.41%. This shows that investors will continue to overlook the relative richness of munis as investors continue to invest in munis due to yields being still attractive.

Municipal Supply: This week, the negotiated calendar will have an expected volume of $8.4 billion with the largest deals being the $1 billion Dormitory Authority of the State of New York, followed by the $995 million California Community Choice Financing Authority Clean Energy Project Revenue Bonds issuance. The Commonwealth of Kentucky State Property and Building Commission plans to issue $600 million. AmeriVet will be participating in two issues this week as a Selling-Group-Member for the $490 million Commonwealth of Massachusetts Commonwealth Transportation Fund issuance and the $45 million New Mexico Finance Authority Senior Lien Public Project Revolving Fund Revenue Bonds issuance.