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AmeriVet Weekly Muni Snapshot

Municipal New Issuance: Last week’s negotiated calendar totaled to about $6.77 billion with many issuers deciding to issue before the Thanksgiving holiday week and capitalize on the markets improving over the last few weeks as many investors are coming back buying. The largest deal of the week was the $750 million New York City Water Finance Authority issuance which AmeriVet was part of the Selling Group. The next largest deal of the week was the $596 million Metropolitan Nashville Airports followed by Duval County School District issuing $561 million in COPS.

Municipal Secondary Trading: Trading for the week totaled to roughly $54.36 billion for week as secondary trading levels continues to be at elevated levels. With inflation numbers coming in better than expected from the prior week, many investors started to come back to the markets as they saw this as a sign that the Fed policies to lower inflation seems to be working. Although markets are improving, we are still seeing customers bids-wanted at elevated levels with clients putting up roughly $8.64 billion up for the bid according to Bloomberg.

Municipal Spreads: Munis had one of their best weeks we have seen since July with yields falling on 10-year notes by 26.2 basis points to 2.899%. This is the first time in roughly two months we have seen yields on 10-year notes fall below 3%. With the sharp drop in yields this past week, we continue to see muni ratios fall as 10-year ratios are now yielding 75.70% compared to 82.77% from the prior week. With the short end becoming expensive when compared to Treasuries, many investors have started to move further down the curve and it has been starting to show as ratios further out have come down. For example, 30-year ratios are now at 93.16%. A week prior, that same 30-year ratio was at 98.05%. With yields falling again last week, we did see the muni curve flatten once again to 84 basis points.

For the first time since August, muni-bond funds saw a weekly inflow. According to Refinitiv Lipper US Fund Flows data, investors added about $605 million into municipal bond funds last week. This inflow ended the streak of 14 weeks on outflows and is a positive sign as investors are starting to have positive sentiment towards Fed policies aimed combating high inflation. Investors have pulled about $122 billion from muni bond funds this year as a series of rate hikes by the Federal Reserve have sent yields climbing and investors to the sidelines. However, the better-than-expected inflation data has sparked a comeback into the muni market.

With over half of the month of November over, the muni bond market is posting one of its best months of the year as the muni market has returned about 3.66% so far this month and is on pace to beat Treasuries for the second straight month. Although munis are having a positive month, we are still on pace to have the worst year in decades as muni year-to-date returns are now at -9.67%. If we continue to see inflation come down as well yields finally stabilize, we could see some positive returns for the last six weeks of the year and some positive flows going into 2023.

Municipal Supply: The negotiated calendar will be very light this week due to the Thanksgiving Holiday. We are expected to see roughly $1.14 billion in volume with over a billion of the volume coming from just 4 issues. The largest deals of the week will be the $504 million Tennergy Corporation Gas Supply Revenue bonds, followed by the $207 million Utah Telecommunication Open infrastructure Agency. AmeriVet will be a Co-Manager on the $200 million Massachusetts Housing Finance Agency Taxable issue. The City Of Newark will be issuing $110 million for the Mulberry Pedestrian Bridge Project.