Municipal New Issuance: Last week, the negotiated calendar had a total volume of just over $8.2 billion for the week, with the largest deal of the week being the New Hampshire Health and Education Facilities Authority which issued $416 million. The Louisiana Public Facilities Authority issued $304 million. AmeriVet was in one issue this past week for the New Hampshire Housing Finance Authority which issued $60 million in tax-exempt bonds and $40 million in taxable bonds.

Municipal Secondary Trading: Secondary trading volume totaled to just over $50.98 for the week, an increase from the previous week’s total of $46.13 billion, with 52% of all secondary trading being dealer sells. According to Bloomberg, clients put just over $6.03 billion up for the bid for the week, which is a decrease from the prior week’s total of just over $7.11 billion.

Municipal Spreads: Muni yields were relatively unchanged over the past week which has been a welcome sign as volatility in the markets last month pushed yields higher. With yields relatively unchanged, we only saw 10-year notes rise by just 1.3 basis points to end the week at 3.32%. With yields unchanged for the week, munis did outperform US Treasuries as the 10-year muni-to-Treasury ratio is now yielding 75.84% compared to 77.37% from the prior week. The muni curve remains relatively unchanged for the week with the curve steepening by 1.1 basis points to finish the week at 153 basis points.

For the second straight week, muni bond funds saw inflows of over a billion as investors this past week added approximately $1.1 billion this past week according to LSEG Lipper Global US Fund Flows data. This is a welcome sign as we saw seven straight weeks of outflows totaling to almost $6.4 billion in outflows during those 7 weeks.

With US Treasuries rising over the past week and munis being unchanged, for the second week in a row, munis were able to outperform Treasuries once again. Since April 9^th, munis were at their cheapest levels compared to Treasuries and munis have been able to outperform Treasuries since then as the 2-year ratio has gone from a high of 84.66% to 74.48%, a difference of about 10.18 percentage points. The 5-year ratio has gone from 86.57% to 75.33% a difference of 12.18 percentage points. The 10-year ratio has gone from 88.14% to 75.84% which is a difference of 12.3%, which was the largest drop recorded across the curve. The 30-year ratio went from a high of 102.47% to 91.26% a difference of 10.89 percentage points. The outperformance of munis in the past month has shown that buyers saw the relative cheapness of buying munis at higher yields as the last time we saw the 10-year ratio at 88.14% was in July 2022 in which yields were at 2.64%. Although munis no longer look cheap from a month ago, they are still considered cheap if you compare them now to the start of the year when the 10-year ratio was at 68.41%. Since April 9^th when yields were at their highest of year, munis have rallied with yields on average falling by 45.6 basis points and bring up closer to flat for the year with returns of -.77%, a significant rally in yields from April 9^th when we were down almost 4%.

As we head into the summer, munis could continue to outperform as demand should continue to outweigh supply as we are expected to see about $149 billion in principal and redemption in the summer months, a period in the year in which issuance tends to be a slow during the summer months which could bode well for muni returns as the 10-year average for returns for June, July, and August have been around .68%.

Municipal Supply: The negotiated calendar for the week will have an expected volume of about $10.96 billion. The largest deal of the week, which AmeriVet will be participating in the Selling-Group, will be the $1.15 billion New York City Transitional Finance Authority transaction which will also be issuing $340 million in taxable bonds. The next largest deal of the week will be the $1 billion Dormitory Authority of the State of New York. AmeriVet will also be participating in the Selling-Group for $26 million Maryland Community Development Administration Multi-Family Development Revenue Bonds (Fannie Mae MBS-Secured) issuance which will feature bond designations of Sustainability, Social, and Green.