Municipal New Issuance: With a holiday shortened week, the negotiated calendar last week had a total volume of just over $6.9 billion for the week with the largest deals of the week being the $1.4 Black Belt Energy issue, followed by the State of Louisiana which issued $378 million. Miami-Dade County issued $373 million in AMT bonds and $268 million in tax-exempt bonds. The New York State Housing Finance Agency issued $290 million.

Municipal Secondary Trading: Secondary trading volume for the week totaled to just over $33.64 billion, with 53% of secondary trading being dealer sells. According to Bloomberg (MBWDPAR Index), clients put approximately $3.42 billion up for the bid, a decrease from the prior week’s bids wanted total of $4.99 billion.

Municipal Spreads: Munis rallied this past week with yields falling by an average of 5.7 basis points across the curve with yields on 10-year notes falling by 6.5 basis points to end the week at 2.90%. With yields falling, munis were able to outperform Treasury’s with the 10-year muni-to-Treasury ratio now yielding 65.25%, compared to 66.56% from the prior week. We did see the muni curve flatten by 1.7 basis points this past week to end the week at 186 basis points.

According to LSEG Lipper Global U.S. Funds Flows Data, muni bond funds continue to see positive fund flows as muni bond funds saw investors add about $1.19 billion to muni bond funds this past week. This follows prior week’s inflow of $625 million.

Munis posted a strong week as lower Treasury yields and overall improved sentiment supported tax-exempts. The primary reason for the rally was the easing of geopolitical tensions in Iran as a peace deal between the US and Iran pushed stocks higher and oil prices lower. With the Fed leaving interest rates unchanged, this reinforced the expectations that the Fed remains patient on their next move. Lower Treasury yields have helped support muni valuation across the curve as munis saw bumps of 4-6 basis points in the 2027-2040 maturities while in the 2041-2056 maturity range, we saw bumps of 5-7 basis. Although muni yields are overall lower than they were a year ago, investor demand still remains high as we continue to see positive inflows into muni funds with tax-exempt bonds still remaining attractive enough with regard to yields versus taxable corporates.

With muni-to-Treasury ratios improving over the past week and tax-exempts outperforming Treasury’s in the 2–5-year range, munis are showing strong outperformance versus Treasury’s while the long end have been relatively unchanged for the week but remains at attractive levels compared to the averages seen over the past 5 years. Overall, muni-to-Treasury ratio performance reflected strong demand outpacing supply this past week.

Municipal Supply: The negotiated calendar for the week will have an expected volume of just over $5.25 billion with the largest deals of the week being the $1.4 billion City of Los Angeles Notes issue. The State of Ohio plans of issuing $400 million for the Ohio Water Development Authority. The California Infrastructure and Economic Development Bank plans on issuing $262 million.

Have a great week!