Municipal New Issuance: Last week’s negotiated calendar totaled to just only $509 million for the week as many issuers are done issuing for the year. The largest deal last week was the $74 million Hempstead Township followed by the $63 million Aurora Highlands Community Authority Board.

Municipal Secondary Trading:  Secondary trading last week was very light which totaled to about $42.7 billion as many took the week off for the Christmas Holiday. With just one more week in the year, we should see this week being very light as well. According to Bloomberg, customer bids-wanted was also light with just $8.34 billion up for bid with the bulk of the bids-wanted coming in the first half of the week.

Municipal Spreads: For the first time since October, muni yields rose for the week with 10-year muni yields rising by 6.1 basis points to 2.59%. Even though muni yields rose last week, they were still able to outperform Treasuries as the 10-year ratio is now yielding 70.34% compared to 73.38% from the prior week. With the rise in yields, we did see the muni curve flatten slightly in the past week by 5.2 basis points to 93 basis points.

According to Refinitiv Lipper US Fund Flows data, outflows continued last week as investors pulled about $3.1 billion from municipal bond mutual funds. This follows the prior weeks outflows of $1.22 billion. Investors have pulled over $120 billion so far this year.

With only a few days remaining in the year, muni bonds have had a tough year losing roughly 8.28% for the year with the long end of the curve taking the brunt of the losses as Fed policies to lower inflation concerns have sent investors to the shorter end. The long end has lost roughly 15% for the year as the sell off has sent yields on 30-year notes to 3.55%. At the beginning of the year, 30-year notes were at 1.5%. As you go further down the curve munis have fared much better with bonds maturing in 10 years only losing about 6.42% and bonds maturing in 5 years only losing about 5.2%. As of today, munis have only had 4 months of positive returns, something investors are not used to seeing as munis investors are accustomed to stability in the markets.

Municipal Supply:  The final week of the year will have no supply on the negotiated side.