Municipal New Issuance: The negotiated calendar for the first week of January totaled to just over $1.1 billion with the bulk of the calendar being the $765 million Triborough Bridge and Tunnel Authority issuance which AmeriVet participated as a Selling-Group-Member. With a light calendar, the Triborough Bridge and Tunnel Authority deal took up the bulk of attention for the primary calendar as the deal with maturities being 2 to 3 times over-subscribed.

Municipal Secondary Trading: Secondary trading for the first week of 2023 totaled to about $31 billion with 56% of the trading volume being clients buying. With a very small calendar, it comes to no surprise that the majority of the trading came from clients buying. With only four trading days last week, clients bids-wanted totaled to only $3.32 billion as many traders started to slowly come back to work from the long holiday.

Municipal Spreads: Munis started off the year on a good note with yields falling by 14.7 basis points to end the week at 2.47%. With January usually being a month with lighter weekly calendar and with investors needing to reinvest, we should expect to see yields continue to fall this month. Although muni yields have been falling for the week, we also saw munis underperform slightly to Treasuries with the 10-year now yielding 69.96% of Treasuries compared to 68.14%. The muni curve did steepen slightly as well with the curve steepening by 8.4 basis points to 103 basis points.

According to Refinitiv Lipper US Fund Flows data, outflows continued as investors pulled about $2.477 billion from municipal bond mutual funds continuing the trend we saw all last year in regards to outflows. This follows the prior weeks outflow of $1.9 billion and the fourth consecutive week of withdrawals. Although we are continuing to see yields fall, we are still seeing outflows even as yields are still attractive if you compare them to a year ago.

Munis started the year off on a high note as just one week into the new year munis are up by 1.15% with the long end up by over 2%. This increase is due in part to the lack of new issue supply with just $1.1 billion in total issuance. This has played a significant role in muni bond prices as munis have become increasingly expensive relative to Treasuries. The ratio for 10-year munis compared to Treasuries currently stands at 69.96% which is close to the 12-month low which was at 64.20% back on January 5^th, 2022. This ratio should continue to fall as the 30-day supply is at just $6 billion and with investors receiving $28 billion in principal and interest payments this month, this ratio should continue to fall as demand is exceeding supply.

Municipal Supply: The negotiated calendar will pick up slightly this week with an expected volume of about $2.9 billion with the largest deal being the $632 million Plano Independent School District issuance. AmeriVet will be a Co-Senior Manager on the next largest deal which will be the $337 million Pennsylvania Housing Finance Agency deal which will consist of taxable and tax-exempt bonds.