Municipal New Issuance: Last week’s negotiated calendar totaled to roughly $5.7 billion as issuers returned to the markets after the Thanksgiving Holiday. The largest deal of the week was the $912 million State of Connecticut deal which AmeriVet participated as a Selling-Group-Member. The Black Belt Energy Gas issued $826 million in revenue bonds. New Jersey Transportation Trust Fund issued $750 million in revenue bonds. AmeriVet was also in couple of last week as Selling-Group-Member which were the $ 387 million Massachusetts Clean Water Trust Green bond issue as well as the $72 million New York State Housing Finance Agency issuance.

Municipal Secondary Trading: Secondary trading was very active last week with over $55.7 billion in trading as new issue supply continues to be very light, traders have been going to the secondary markets which has brought yields down even further. As with the secondary trading being very active, clients’ bids-wanted was very active as well. According to Bloomberg, clients put roughly $8.22 billion up for  bid as we are still seeing clients continue to sell despite the muni markets improving over the past few weeks.

Municipal Spreads: With traders returning from a holiday shortened week, muni yields continued to fall with 10-year yields falling by 18.5 basis points to 2.66% as Fed Chair Jerome Powell comments on Wednesday signaled a slower pace of interest rate hikes sent yields even lower. With yields falling again last week, munis continue to outpace Treasuries as the 10-year ratio is now yielding 76.27% of Treasuries compared to the previous week when the ratio was at 77.32%. Just one month ago, the 10-year ratio was at 81.21%. We did see the yield curve continue to steep with the gap between short-term and long-term notes rising by 8.4 basis points to 101 basis points.

Although the muni market has improved the past month, we are continuing to see investors pull cash out of muni bond funds. According to Refinitiv Lipper US Fund Flows data, investors pulled about $1.4 billion from muni bond funds last week which follows the previous weeks outflow of $438 million. This withdrawal adds to the yearly loss of over $124 billion this year.

With munis returning 4.68% for the month of November, munis are poised to continue this rally into December as we can end 2022 on a high note and close out the worst performing year on record for munis. With an estimated supply of just $9.4 billion remaining for the year, coupled with investors having a lot of cash available, as well as the possibility of the Fed slowing down their interest rate hikes should continue to bring down yields going into 2023. Not only has yields come down significantly, but ratios have as well. Since October we have seen 10-year ratios come down from 88.32% to 75.83%. As you go further down the curve, we see ratios go down as well. The 5-year ratio in October was at 79.22% and today it is at 69.76%.

Municipal Supply: Supply for the week will have an expected negotiated volume that will total to about $4.5 billion with four issues being over $400 million. The largest deal of the week which AmeriVet will be a Selling-Group-Member will the be the $489 million New York City Housing Development Corporation issuance. The California Community Choice Finance Authority will be issuing $451 million for their clean energy Project. The City of Los Angeles Department of Water and Power will be issuing $400 million in revenue bonds. AmeriVet will also be in the $72 million Massachusetts Housing Finance Agency issue as a Co-Manager.