Municipal New Issuance: For the third week of December, the negotiated calendar totaled to over $8.13 billion with the largest deal of the week being the New York City Transitional Finance Authority’s  $1.8 billion Future Tax Secured issuance which AmeriVet participated in the Selling-Group. The Authority also issued $167 million of Future Tax Secured Taxable bonds. The Kentucky Public Energy Authority issued $748 million. Additionally, The Ohio State University issued $500 million.

Municipal Secondary Trading: Secondary trading volume totaled to approximately $47.17 billion with 53% of secondary trading being dealer sells. According to Bloomberg {MBWDPAR Index}, clients put roughly $6.21 billion up for the bid, an increase from the prior week’s number of $5.81 billion.

Municipal Spreads: This past week, munis yields were relatively unchanged for with 10-year notes falling by 1 basis points to end the week at 2.73%. With yields being unchanged for the week, munis did underperform Treasuries as the 10-year muni-to-Treasury ratio is now yielding 65.88% compared to 65.54% from the prior week. We did see the muni curve steepen by 1.7 basis points to end the week at 173 basis points.

According to LSEG Lipper Global US Fund Flows data, investors added $400 million to muni bond funds this past week, succeeding the prior week’s inflow of $16 million.

Prior to the release of the positive inflation data, munis were down a basis points for the week. However, when the CPI data was released last week, munis saw a one basis point bump. Despite this bump, munis are still down for the month with just two weeks left in the year. The 1-4 year range are seeing the largest gains of .22% to .24% for the month while the long end has struggled this month being down .46%. Currently, munis are down slightly for the month as returns for the month are at .08% with year-to-date returns at 4.07%. With the strong CPI data, we could see the Fed take a pause in cutting rates in January but that would largely depend upon December’s CPI report which will be released during the 2^nd week of January.

With yields being unchanged for the week, munis have outperformed Treasures for the month as the 2-year ratio on Friday was at 70.29%. whereas at the start of the month the 2-year ratio was at 70.81%. The 5-year ratio at the start of the month was at 66.97% compared to 64.83% on Friday while the 7-year ratio was at 66.34% at the start of the month and is now yielding 63.98%. The 10-year ratio at the start of the month was at 68.17% compared to 65.88% on Friday, and finally, the 30-year ratio was at 88.08% at the start of the month and on Friday the ratio was at 86.71%. With just 7 trading days left, we shouldn’t expect too much change in ratios.

Municipal Supply: With Christmas Holiday this week, issuers will take a pause from issuing and will be done issuing for the year.

Have a great week!