Municipal New Issuance: The negotiated calendar last week had a total volume of just over $6.1 billion with the largest deals of the week being the $1.2 billion New York City Transitional Finance Authority which AmeriVet participated in the Selling-Group, followed by the $800 million Southern California Public Power Authority. AmeriVet served as a Co-Manager for the State of Connecticut’s $163 million State Revolving Fund (Green Bonds) issue and AmeriVet also participated as a Selling Group Member for the Connecticut Housing Finance Authority which issued $268 million in taxable bonds and $20 million in tax-exempt bonds. AmeriVet also participated in the Selling-Group for the $11 million New Hampshire Housing Finance Authority.

Municipal Secondary Trading: Secondary trading volume for the week totaled to just over $36.94 billion, with 52% of secondary trading being dealer sells. According to Bloomberg (MBWDPAR Index), clients put just over $3.56 billion up for the bid, which is a decrease from the prior week’s bids wanted total of $4.72 billion.

Municipal Spreads: Munis rallied this past week with yields falling by 15.8 basis points across the curve with yields on 10-year notes falling by 13.4 basis points to end the week and month at 2.97%. With yields falling this past week, munis were able to outperform Treasuries with the 10-year muni-to-Treasury ratio now yielding 67.06%, compared to a week ago when the ratio was at 68.19%, and at the start of the month, the ratio was at 67.56%. We did see the muni curve flatten by 3.5 basis points to end the week and month at 191 basis points.

Muni bond funds continue to see positive fund flows as muni bond funds saw investors add about $2.3 billion to muni bond funds this past week. This follows prior week’s inflow of $1.5 billion according to LSEG Lipper Global U.S. Funds Flows Data. This is the fourth week in a row in which we saw inflows of over $1 billion.

Munis had a volatile month of May, but held steadfast in the final week despite rising Treasuries yields, inflation concerns, and geopolitical tensions. Fixed income markets are starting to feel sustained pressure and this reality coupled with Treasury volatility is dominating the headlines as the 30-year Treasury yield went above 5%. Despite the volatility, munis were able to show a small positive return for the month with returns of .37%, pushing year-to-date returns to 1.34%. At the start of the month, munis started out strong, but by mid-month, munis took a dip and went into negative territory as inflation, geological concerns push yields higher, but as a ceasefire in Iran was extended, munis were able have a strong rally in the final week of the month. This volatility pushed the 10-year AAA benchmark toward 3.10% and the 30-year toward 4.45%, making the long-end particularly attractive for yield-seeking investors.

Muni-to-Treasury ratios remained relatively stable throughout the month despite heightened volatility in the broader rates market, with the 10-year ratio staying near historically attractive levels and continuing to draw crossover investors. The 2-year and 5-year ratios hovered around 62% for the month, while the 10-year ratio hovered near 68%, and the 30-year ratio at around 88%.

Municipal Supply: The negotiated calendar for the first week of June will have an expected volume of just over $11.3 billion, with the largest deals of the week being the Regents of the University of California which will issue $989 million in tax-exempt bonds and $150 million in taxable bonds, followed by the $823 million Harris County Hospital District. AmeriVet will be serving as a Co-Manager for the Wisconsin Housing and Economic Development Authority’s $140 million Home Ownership Revenue Bonds transaction. AmeriVet will also be participating in the Selling-Group for the $258 million Tri-County Metropolitan Transportation District of Oregon Senior Lien Payroll Tax Revenue and Refunding Bonds transaction.

Have a great week!