Municipal New Issuance: Last week, the negotiated calendar totaled to just over $7.2 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 participated in the Selling-Group. The next largest deal of the week was the $631 million University of Texas Permanent University Fund bonds issuance. AmeriVet served as a Co-Manager for the Massachusetts Housing Finance Agency’s Single-Family Housing Revenue Bonds issuance which consisted of $75 million in tax-exempt bonds and $65 million in taxable bonds. As of today, muni issuers have issued nearly $100 billion this year, approximately 27% higher than same time last year.

Municipal Secondary Trading: Secondary trading for the week totaled to approximately $39.20 billion with 54% of all secondary trading being dealer sells and the bulk of secondary trading volume being executed on Thursday. According to Bloomberg, clients put roughly $6.58 billion up for the bid, an increase from the prior week’s bids-wanted volume of $4.97 billion.

Municipal Spreads: Muni yields rose sharply this past week with yields rising by an average of 15.1 basis points, with yields in the long-end of the curve rising by approximately 20 basis points. We did see yields on 10-year notes rise by about 13.5 basis points to end the week at 3.08%. With muni yields rising, munis did underperform compared to Treasuries as the 10-year muni-to-Treasury ratio is now yielding 71.47%, compared to the prior week when the ratio was at 68.62%, and just one month ago the ratio was yielding 67.19%. With yields rising the most in the long-end, the muni curve steepened over the past week by 13.9 basis points to 158 basis points.

According to the LSEG Lipper Global Funds Flow data, muni bond funds saw an outflow of $373 million from their funds which marks the first outflow from muni bond funds since the second week January. With yields on the rise recently, investors are sitting on the sidelines until volatility subsides.

Munis struggled this past week as supply outweighed demand, CPI data struggling to meet Fed’s targeted pace, Presidents Trump’s threats of tariffs, and anticipated layoffs have sent the markets spiraling. Currently, month-to-date losses stand at 1.41% and have all but erased any positive gains this year as returns for the year are at .06%. With one of the biggest sell-offs in the past two years, yields jumped by as much as 20 basis points in the long end.

At this time, munis are at their cheapest valuation versus Treasuries as long dated munis are at 90%, marking their cheapest ratio in over a year as over the past year, 30-year muni ratios have been hovering around 84%. We also are seeing a similar trend on 10-year munis as the average since Jan 2024 is 65.36%, and as of today, we are at around 71%. The cheapest we have seen since September of 2024.

Municipal Supply: This week, the negotiated calendar will have an expected volume of $5.8 billion with the largest deal of the week being the $1.1 billion Metropolitan Transportation Authority Transportation Revenue Refunding Green Bonds (Climate Bond Certified) issuance which AmeriVet will be participating in the Selling-Group. The Alabama Federal Aid Highway Finance Authority plans to issue $608 million and the San Diego Unified School District will issue $509 million.