Municipal New Issuance: For the final week of May, the negotiated calendar volume totaled to just over $9 billion for the week with the largest deals of the week being the Dormitory Authority of the State of New York deal which issued $1.2 billion in tax-exempt bonds and $985 million in taxable bonds, followed by the New Jersey Turnpike Authority which issued $1.985 billion in two separate issuances. AmeriVet participated in one deal this past week as a Selling Group Member for the Connecticut Housing Finance Authority which issued $250 million in taxable bonds and $20 million in tax-exempt bonds. May’s total issuance for the month was $42 billion. Issuance for the year is up by almost 15% versus a year ago with approximately $220 billion in issuance for the first 5 months of the year.

Municipal Secondary Trading: Secondary trading volume totaled to just over $35.23 billion with 51% of secondary trading being dealer sells. According to Bloomberg, clients put roughly $6.23 billion up for the bid which is a decrease from the prior week’s total of $6.57 billion due largely in part to the Memorial Day Holiday last Monday.

Municipal Spreads: Muni yields for the week fell by an average of about 4.4 basis points with yields on 10-year notes falling by 5.3 basis points to end the week and  the month of May at 3.31%. Although yields fell for the week, munis did underperform Treasuries as the 10-year muni-to Treasury ratio is now yielding 75.31% compared to 74.58% from the prior week. At the start of the month of May, the ratio was at 80.68%. We did see the muni curve steepen this past week by 6.3 basis points to end the week at 176 basis points.

For the fifth straight week, muni bond funds saw inflows as investors added about $526 million to muni bond funds, according to LSEG Lipper Global US Fund Flows data. This follows the prior week’s inflows of $768 million. May had a total inflow of about $3.16 billion.

Muni returns of the month were relatively flat with returns of just .06%, bringing us to a year-to-date loss of .96%. The 7-year munis saw the largest returns at 1% while the long end saw the largest loss of .98%. The long end struggled to gain any footing this month as yields rose by an average of 11.8 basis points while the 1–10-year range saw the most positive returns of .76% with yields falling by an average of about 9.6 basis points. With the modest gains in munis, munis did outperform Treasuries so far this year as investors continue to take advantage of the higher yields as well as the cheaper ratios from what we saw a year ago as the 10-year ratio on May 31^st 2024 was yielding 69.02%, and the ratio today is at 75.31%. Yields have risen by an average of about 20 basis points within a year.

With June being a typically a strong month for munis as reinvestment demand has been typically high for the month, we are expected to have an estimated $61 billion in principal and interest redemptions which will help push us back into the green for the year. The month of June has been historically positive for the last 10 years. Demand should continue to outpace supply this month and with yields and ratios being higher than they were a year ago, we should expect to see positive numbers for June. Investors should continue to take advantage of this before any potential rate cuts later this year.

Municipal Supply: For the first week of June, we should see a robust calendar as the expected volume currently stands at $15.8 billion. The largest deals of the week will be the $1.5 billion Indiana Finance Authority Health System Revenue bonds, followed by the $994 million Public Utilities Commission of the City and County of San Francisco. The Downtown Revitalization Public Infrastructure District (Utah) plans on issuing $869 million.

Have a great week!