Municipal New Issuance: With the Thanksgiving holiday last week, the negotiated calendar was exceptionally light with just $1.3 being issued with the largest being the $557 million Tennergy Corp Gas Supply Revenue bonds. AmeriVet was in one deal for the week which was the $200 million Massachusetts Housing Taxable issue which saw good demand despite being a holiday shortened week.

Municipal Secondary Trading: Secondary trading was very light due to the Thanksgiving holiday on Thursday as well as Friday being an early close. Secondary trading for last week totaled to just $27.9 billion with 52% of all trading being clients buying. Client’s bids-wanted was also down for the week with just $4.61 billion.

Municipal Spreads: Even with a holiday shortened week, muni yields continued to fall with 10-year notes falling by 4.8 basis points to 2.83% as it appears that inflation pressure seems to be easing amongst investors as well as limited new issue supply and the rally in Treasuries has helped yields come down from their highs. Although muni yields dropped for the week, they did underperform when compared to Treasuries as the 10-year ratio is now yielding 77.32% compared to 75.58% from the prior week. Even though ratios are slightly higher than the previous week, muni bonds are still outperforming Treasuries from one month prior when ratios were at 85.19%. With the drop in yields, we did see the muni curve steepen by 8.6 basis points to 93 basis points.

According to Refinitiv Lipper US Fund Flows data, investors pulled roughly $438 million from muni-bond mutual funds last week which followed the previous weeks inflow of $605 million as outflows for the year have totaled to roughly $123 billion.

Munis are on pace to have their best month since 1986 which is positive news with November having the lightest month of issuance this year as well as investors sentiment towards higher inflation seems to be waning. Since the start of the month, munis have fallen about 50 basis points across the curve and  currently muni bonds have gained 4.06% this month which is the largest monthly gain for munis since August 1986. This rally has helped the ease of the losses munis have had this year, prior to November munis were down by over 12%, but are now down by about 9.32%.Yields have come down from their 11 year highs as investors have started to buy as it appears that the Fed’s policy to bring down inflation is working.

Municipal Supply: The negotiated calendar for the week will still be on the lighter side with just $3.04 billion in expected issuance with the largest being the $900 million state of Connecticut issue which AmeriVet will be a Selling-Group-Member. The City of San Jose Financing Authority will be issuing $275 million in Wastewater revenue bonds.