Municipal New Issuance: For the first week of December, the negotiated calendar totaled to just over $13.65 billion in issuance with the largest deal being the $1.5 billion New Jersey Transportation Trust Fund Authority issuance. The next largest deal of the week was the $926 million Main Street Natural Gas issue. The State of Connecticut issued $768 million which AmeriVet served as a Co-Manager on. AmeriVet also served as a Co-Manager on the $775 million Greater Orlando Aviation Authority AMT issue. Additionally, AmeriVet was also a Co-Manager on the New Jersey Housing and Mortgage Finance Agency which issued $273 million in tax-exempts and $62 million in taxable bonds. The tax-exempt issue saw robust demand in the long-end as we saw the longer maturities being over-subscribed by 6-10 times. AmeriVet also participated in the Selling-Group for the $178 million Maryland Community Development Administration Multi-Family Development Revenue Bonds issuance.

Municipal Secondary Trading: Secondary trading totaled to just over $43.9 billion for week with 53% of all trades being dealer sells, and the majority of the trading being on Tuesday. According to Bloomberg, clients put up approximately $6.05 billion up for the bid for the week with Thursday having the most bids-wanted.

Municipal Spreads: Munis continued their rally going into the first week of December as yields fell by an average of 5.1 basis points, with yields on 10-year notes falling by 5.1 basis points to end the week at 2.78%. With yields falling this past week, munis continue to outperform Treasuries as the 10-year muni-to-Treasury ratio is now yielding 67%, compared to the prior week when the ratio was at 67.94%, and just one month ago it was yielding 70.90%. The muni curve did flatten this past week by 1.1 basis points to finish the week at 93 basis points.

According to LSEG Lipper Global US Fund Flows data, muni bond funds saw investors add about $1.2 billion to their funds this past week following the prior week’s inflow of $711 million. This inflow marked the  21^st straight week of inflows indicating that investors are still buyers of tax-exempts despite munis continuing to richen in comparison to Treasuries.

The first week of December continues to show that munis aren’t ready to slow down just yet as the markets gear up for another potential rate cut later this month. For the first week of December, we saw returns of .33% for the month, with year-to-date returns of 2.88%. With December being a favorable month for returns as the last time we’ve had a negative return in munis for the month of December was back in 2013, munis returns should continue going strong until the end of the year. Demand for tax-exempts should continue to be strong as data suggests issuance will be as well going into the new year. There are concerns that the new administration coming into office in January could potentially eliminate tax-exemption for munis or place limits on munis tax benefits.

Municipal Supply: For the second week of December, the negotiated calendar will have an expected volume of just over $8.93 billion with three deals covering almost half of the issuance for the week. The largest deal of the week will be the $2.19 billion Dormitory Authority of the State of New York, followed by the $1.25 billion California Community Choice Finance Authority issuance. The Chicago Transit Authority will issue $570 million in refunding bonds. AmeriVet will be serving as a Co-Manager for the Philadelphia Redevelopment Authority which will consist of $127 million in taxable bonds, and $69 million in refunding bonds and $21 million in social bonds. AmeriVet will also be serving as a Co-Manager for the New York State Housing Finance Agency’s 325 Kent Avenue Housing Revenue Bonds issuance will will feature a Fannie Mae Direct Pay Credit Enhancement. Supply for the year has jumped to over 35% from the previous year which has pushed issuance to almost $500 billion for the year of 2024.