Municipal New Issuance: With the Federal Open Markets Committee (FOMC) meeting this past week, the negotiated calendar had a volume of just over $6.7 billion. The two largest deals of the week were the $1.1 billion Oklahoma Turnpike Authority issuance followed by the $1 billion Columbus Regional Airport Authority. The Regents of the University of California issued $500 million in General Revenue Bonds. The total new issue volume for the month totaled to just over $36 billion, which is a 20% increase from same period a year ago.

Municipal Secondary Trading: Secondary trading for the week totaled to over $38.72 billion with 54% of all secondary trading being dealer sells and with the bulk of secondary trading volume being executed on Thursday. According to Bloomberg, clients put up roughly $5.55 billion up for the bid which is up slightly from the prior week’s bids-wanted volume of $5.4 billion.

Municipal Spreads: For the final week of January, munis saw yields fell by an average of 7.3 basis points across the curve with yields on 10-year notes falling by 8.3 basis points to end the month at 3.05%. With yields falling this past week, munis were able to outperform Treasuries with the 10-year muni-to-Treasury ratio now yielding 67.38%, compared the prior week when the ratio was at 67.95%. At the start of the year, the 10-year ratio was at 68.41%. We did see a slight steepening of the curve with the curve steepening by .8 basis points to 125 basis points.

According the LSEG Lipper Global Funds Flow data, muni bond funds added approximately $742 million to their funds as this follows the prior week’s inflow of $2 billion. Long Term funds saw inflows of $520 million, intermediate funds added about $123 million, and high yield funds saw inflows of $335 million this past week.

After a rough start to the month, munis were able to do a complete 180 and end the month in the green. At the halfway mark of the month, it looked like we would be starting off the year in the red. Munis were down roughly 1% at the midway point of the month, but with a strong rally, munis ended the month in the green at .50%. The strong rally was due in part to a strong calendar that saw an issuance size of over $36 billion which was roughly a 20% increase from January 2024’s issuance as well as positive gains in the Treasury market. With multiple deals of over a billion dollars, such as the $1.6 billion Triborough bridge, the $1.5 billion California Regents, and the $1.1 billion Oklahoma Turnpike issuance, each saw strong demand that helped fuel a rally at the back half of the month. In the first half of the month, we saw muni yields rise by an average of about 16.2 basis points across the curve, but with the strong demand for munis, muni yields were able to rally by an average of 16.9 basis points.

Municipal Supply: The negotiated calendar for the week will have an expected volume of approximately $6.1 billion with the largest deals of the week being the $985 million Florida Development Finance Corporation Revenue Bonds issuance for the Brightline Florida Passenger Rail Expansion Project, followed by the $776 million Dallas Independent School District. The Lower Colorado River Authority  plans on selling $544 million in Transmission Contract Refunding Revenue Bonds.