Municipal New Issuance: For the first week of June, the negotiated calendar had a total volume of approximately $16.48 billion for the week, with the largest deals being the San Francisco Public Utility which issued roughly $975 million followed by the Metropolitan Washington Airport Authority which issued just over $714 million in AMT bonds. Additionally, the University of Texas issued $694 million this past week. Currently, municipal issuance is up by roughly 20% from last year and just this past week, we saw about $20 billion in new issuance with competitive issuances which was the most since 2017.

Municipal Secondary Trading: Secondary trading volume totaled to just over $46.38 billion last week with 53% of secondary trading being dealer sells. According to Bloomberg, clients put roughly $5.96 billion up for the bid, down from the prior week’s total of $6.23 billion.

Municipal Spreads: Muni yields remained relatively flat for the week with yields on 10-year notes staying at 3.32% for the first week of June. With the selloff in Treasuries due to the stronger than expected nonfarm payrolls report, munis were able to outperform Treasuries over the past week with the 10-year muni-to-Treasury ratio yielding 73.68%, compared to 75.24% from the prior week. We did see the muni curve steepen this past week by 7.6 basis points to end the week at 183 basis points.

According to LSEG Lipper Global US Funds Flows data, muni bond funds saw inflows for the sixth straight week as investors added approximately $426 million to muni bond funds. This follows the prior week’s inflows of $526 million.

With just one week into the final month of the first half of the year, munis were relatively unchanged with yields across the curve cutting an average of just .1 basis points with the front end seeing a seeing a bump by an average of 3.5 basis points, while the belly of the curve saw a 2.3 basis points bump. The long end saw some cuts with an average of 3.4 basis point cuts across the range. With the cuts in the long end, muni returns for the month stand at -.09% pushing year-to-date returns back below -1%. We continue to witness the front end of the curve experience strong returns of about 1% for the year, but the long end continues to bring down muni returns as year-to-date returns are at -4.04% for the year.

Munis were poised to underperform Treasuries last week, but with a stronger than expected Treasuries sell off, munis were able to outperform Treasuries in the first week of June. Munis have continued to outperform Treasuries over the past two months, beginning on April 9^th in which we saw the 30 year ratio at 102.46%, the 10-year ratio at 88.14%, the 5-year ratio at 86.57%, and the 2-year ratio at 84.65%. Fast forward to today and those ratios are at 92.26%, 73.68%, 69.16%, and 68.01% respectively. With the jobs reports showing that the Fed will likely continue to maintain its holding pattern, this approach by the Fed could give some fuel for munis to outperform Treasuries in the meantime.

Municipal Supply: For the second week of June, the negotiated calendar will have an expected volume of about $11.5 billion with the largest deals of the week being the $1 billion Emory University, followed by the $715 million City of Philadelphia. The County of Los Angeles will issue $700 million in a Note deal. AmeriVet will be in two issues this week as a Co-Manager, the first being the Pennsylvania Housing Finance Agency which will be issuing $510 million in tax-exempt bonds and $68 million in taxable bonds. AmeriVet will also be serving as a Co-Manager for the Wisconsin Housing and Economic Development Authority, which will be issuing $95 million tax-exempt bonds and $50 million in taxable bonds. AmeriVet will also be participating in the Selling-Group for the $385 million New York City Housing Development Corporation transaction.

Have a great week!