Municipal New Issuance: The negotiated calendar last week totaled to around $9.4 billion for the week as some of the larger issuers returned to the markets as three of the issued totaled to almost half of the issuance. The largest deal of the week was the $2 billion Commonwealth of Massachusetts Taxable Bond issue. Oklahoma State Development Authority also issued Taxable Bonds to the sum of $1.3 billion. AmeriVet was in the third largest deal of the week which was the $950 million New York City General Obligation issue as a Selling-Group-Member. AmeriVet was also in one other deal which was the $52 million Wisconsin Housing and Economic Development Authority as a Co-Manager.

Municipal Secondary Trading: Secondary trading continues to be light as the third week August only had roughly $34.35 billion in trades. Trading has been very light due to the push back from investors against valuations in munis, more particularly, the short-end of the markets. According to Bloomberg, client bids-wanted was up slightly to $5.7 billion last week compared to $5.2 billion from the prior week. Bids-wanted continues to be high as many mutual funds continue to see outflows from their funds.

Municipal Spread: Last week muni yields rose sharply with 10-year notes rising by 19.8 basis points in the past week to 2.44%. Yields on 10-year notes rose by 8.5 basis points alone on Wednesday which was the biggest advance since June 13^th of this year. With the selloff in the front end of the curve on Wednesday, yields on one-year notes rose to above 2% for the first time since March 2020. This adjustment in rates has inverted the curve as investors are finally pushing back against how expensive the short end has become. With yields on the front end rising by more than 25 basis points than the back end of the curve, we did see the muni curve flatten to 99 basis points. For the first time in almost a month, muni’s underperformed compared to Treasuries as the 10-year ratios are now yielding 82.83% compared to 79.99% a week ago.

For the second straight week, muni-bond mutual funds saw investors pull cash from their funds. Investors pulled about $229 million from those funds last week according to Refinitiv Lipper US Funds Flows data. This follows the prior week’s outflow if $635 million. ETF funds also saw outflows last week to the sum of $279 million.

August has been a complete 180 compared to July as we are on pace to have negative returns for the month with month to date returns of -1.4%. This is a stark reversal from the prior month where we saw returns of 2.64%. This is simply the market correcting itself as the front end has gotten too expensive this year. This sharp selloff has muni ratios rising significantly with 2- & 3-year ratios at around 67%, the five-year at 70%, the 10-year at 83%, and the 30-year at 99%. Since August 1^st, yields on 1-year notes have risen by 86 basis points to 2.18% which has caused the muni curve to invert as investors have pushed back as valuations have gotten too high.

Municipal Supply: The negotiated supply for the week will have an expected volume of around $5.3 billion for the week with the largest deal being the $1 billion New York City Transitional Finance Authority which AmeriVet will be in the Selling Group. The City of Charlotte North Carolina Water and Sewer System will be issuing $467 million which will include taxable and tax-exempt bonds. Finally, the Minneapolis-St Paul Metropolitan Airport Commission plans to issue $385 million. AmeriVet will also be in the $160 million South Carolina State Housing Finance and Development Authority issuance as a Selling-Group-Member.