Municipal New Issuance: The final week on May had total volume of $4.8 billion with the largest deal be being the $1 billion State of Connecticut deal which consisted of taxable and tax-exempt bonds, which AmeriVet was part of the Selling Group. One notable deal that garnered a lot of attention even though it was a small issuance was the $32.5 million Union College issue which had received $680 million in orders. With the robust demand, they were able to lower yields on the 2032 maturity by 19 basis points which was finally priced at 3.4%.

Municipal Secondary Trading: With an early close and many traders taking a long weekend ahead of the Memorial Day Holiday, secondary trading totaled to just over $50 billion for the week. As with trading volume being down, so was customer’s bids-wanted with customers putting up just $5.47 billion for the week according to Bloomberg.

Municipal Spread: Municipal yields had one of its biggest drops of the year with munis maturing in 10 years falling by over 40 basis points in the past week to 2.51%, something the markets most surely needed as yields have risen by over 180 basis points prior to this rally. This is a stark turnaround from earlier this year as yields have increased and buyers have been a struggle to find. With the nice rally in munis last week, we did see ratios improve with 10-year ratios improving in tax-exempts favor to now yield 91.68% of Treasuries, compared to 104.45% the week prior. With yields falling across the yield curve, we did see the muni curve flatten with the gap between short-term and long-term notes flattening by 32 basis points to 102 basis points last week.

Outflows continue to plague the municipal-bond mutual funds as investors once again pull money from those funds to the sum of $1 billion last week. This marks the 15^th consecutive week of outflows and follows the prior week’s withdrawals of $2.7 billion. Year-to-date investors have withdrawn roughly $67 billion from muni funds year-to-date. Hopefully with the rally we had in the last week we could start to see some inflows.

After having a brutal start of 2022, the muni markets saw some stability that investors have been waiting for. Muni bonds are on track for its longest winning streak since 2021. Since May 19^th when the rally had started, munis have gained about 3.8%, the biggest 7-day rally since April 2020. This rally is a result of stronger Treasuries as buyers have saw cheaper valuations as ratios hit over 100% prior to this rally. Although we’ve had a nice rally, municipals are still down 7.6% for the year, which is still on pace for their worst performance dating back to 1980. Although, we have had a nice rally we still can’t get too overly excited with this rally as investors still should be concerned with the potential of a recession.

Municipal Supply: This week’s negotiated calendar will be light once again as many are will be returning to their desks from the long weekend. We are expected to see an expected volume of roughly $3.1 billion. The largest and most notable deal of the week will be the $505 million University of Utah Green bond issuance and the $500 million State of Colorado COP’s issuance. AmeriVet will be a Co-Manager in one issue for the week which will be the $400 million New York State Housing Finance Agency Affordable Housing Revenue Bonds.