Municipal New Issuance: For the second week of December, the negotiated calendar totaled to approximately $10.6 billion for the week. The largest deals of the week were the $2.1 billion Dormitory Authority of the State of New York State Sales Tax Revenue Bonds refunding issue, followed by the $1.2 billion California Community Choice Financing Authority Clean Energy Project Revenue Bonds issuance which featured a Green Bonds designation. This past week, AmeriVet served as a Co-Manager for the $135 million New York State Housing Finance Agency’s 325 Kent Avenue Housing Revenue Bonds issuance which featured a Fannie Mae Direct Pay Credit Enhancement. Last week was the last significant calendar week for municipal issuance this year as issuers are mostly finished for the year.

Municipal Secondary Trading: Secondary trading totaled to just over $46.86 billion for week with 52% of all trades being dealer buys and the majority of the trading being done on Thursday. According to Bloomberg, clients put up roughly $8.13 billion for the bid last week with Wednesday having the most bids-wanted in two years with a total of $2.41 billion. We also saw bids-wanted levels rise above $2 billion on Thursday as well.

Municipal Spreads: Muni yields rose this past week with yields rising an average of 14.3 basis points with yields on 10-year notes rising by 13.8 basis points to end the week at 2.92. The bulk of the cuts in the markets was on Thursday where we saw yields being cut by 2-10 basis points across the curve. With yields rising this past week, munis did outperform versus Treasurys despite the rise in yields as the 10-year muni-to-Treasury ratio is now yielding 66.39%, compared to the prior week when the ratio was at 66.97%. We did see the muni curve steepen by 7.8 basis points this past week ending the week at 101 basis points.

According to LSEG Lipper US Fund Flows data, for the first time since June of this year, muni bond funds saw investors pull approximately $316 million from those funds. This outflow has broken the streak of 23 straight weeks of inflows into municipal bond funds. Just last week, we saw inflows to the tune of $1.15 billion and the last time we saw an outflow out of muni bond funds was during the last week of June of this year in which we saw an outflow of $498 million.

With CPI coming in line with market expectations earlier last week, data indicates that inflation is still an issue and has pushed yields higher overall for the week. We saw muni yields rise overall this past week with returns for the month dipping into the red as month-to-date returns now stand at -.54% which brings year-to-date returns lower to 1.99%. The majority of the cuts this past week were on Thursday with yields rising about two to ten basis points across the curve. The cuts in yields were mainly due to the lack of supply this past week as well as munis following Treasurys due to the CPI report. With the Fed meeting later this week, we still expect the Fed to cut rates by 25 basis points despite data indicating that inflation is still a concern. However, munis should still perform well overall for the remainder of the year and into 2025.

Municipal Supply: The negotiated calendar for the third week of December will have an expected volume of just over $2.16 billion with the largest deal of the week being the $1.5 billion New York City Transitional Finance Authority Future Tax Secured Tax-Exempt Subordinate Bonds issuance which AmeriVet will be participating as a Selling-Group-Member.