Municipal New Issuance: For the final week of 2022 we did not have any deals on the negotiated calendar.

Municipal Secondary Trading: Secondary trading for the final week of the year totaled to $22.9 billion as many took the final week off. 2022 was a very volatile year with a high volume of secondary trading due to the rise of rates as well as the lack of supply this year. Client’s bids-wanted was also down for the week with just $3.35 billion put up for the bid.

Municipal Spreads: The final week of 2022 saw yields rise once again as yields on 10-year notes rose by 4.8 basis points to 2.64%. 2022 has been a really difficult year as we have seen yields rise by an average of almost 200 basis points. With yields rising in munis, we did see munis outperform Treasuries last week as 10-year munis are now yielding 68.14% compared to 69.14% from the week prior and at the start of the year those ratios were at 65.21%. For the last week of the year, we did see the muni curve steepen slightly by just 2 basis points to 95 basis points, at the beginning of the year the curve was at 80.1 basis points.

According to Refinitiv Lipper US Fund Flows data, outflows continued last week as investors pulled about $1.9 billion out of municipal-bond mutual funds as this follows the prior week’s outflow of $3.1 billion. Municipal-bond mutual funds have seen record numbers of outflows that have totaled to well over $120 billion for the year which has erased the strong inflows we saw back in 2021.

2022 has been a rough year for the fixed income markets as record high inflation pushed investors to sell off as the Fed has had to take an aggressive stance this year to combat record highs of inflation. This stance has seemed to be working as inflation has slowly came down and the FOMC back in December opted to hike rates to 50 basis points after four consecutive 75 basis point rate hikes. Munis have had a much different 2022 than what we saw back in 2021 as this year as munis lost roughly 8.53% compared to a positive return of 1.52% back in 2021. Munis were on pace to be even lower back in October but a November rally helped munis climb out of the hole. It will be hard to say what 2023 will bring us, but with the Fed saying there will be a few more rate hikes in 2023, this could bring some opportunity to investors as volatility has slowed and coupled with attractive yields, we should see a brighter 2023.

Municipal Supply: For the first week of 2023, the expected negotiated calendar is expected to be $1.16 billion with the largest deal being the $963 million Triborough Bridge and Tunnel Authority issuance for the MTA Bridges and Tunnels.