Municipal New Issuance: Last week’s negotiated calendar totaled to about $6.2 billon with the largest deals of the week being the $1.77 billion University of California Regents followed by the $988 million California Community Choice deal. With yields rising this past week, the University of California had to adjust their yields on their bonds due to the sharp rise in yields this week as we saw the muni market lose about .5% on Wednesday. Although supply has been limited this year, demand for bonds has shifted last month as economic data pushed investors to hit the brakes as the Fed may continue to be aggressive in rate hikes.

Municipal Secondary Trading: Secondary trading for the week totaled to about $36.85 billion with about 60% of secondary trading being clients buys as many took advantage of the rise in yields this past week. With supply still low, investors have continued to go to the secondary markets. According to Bloomberg, clients put up roughly $6.08 billion up for the bid last week, an increase from the prior week’s bids-wanted of $5.79 billion.

Municipal Spreads: Muni yields rose once again this past week as this week marks the worst rout for muni market since last October. This past week, 10-year notes rose by 24.5 basis points to 2.55% with muni yields rising an average of 25 basis points across the curve with the larger cuts being in the shorter end. With the rise in yields, we did finally see muni ratios rise as we slowly start to catch up to Treasuries. Currently, 10-year notes are now yielding 67.04% of Treasuries compared to 61.83% from the prior week. With the rise in munis this past week, we did see the muni curve flatten by 19.8 basis points to 81 basis points as bonds maturing in 1 year rose by 41 basis points while 30-year maturities only rose by 21 basis points.

According to Refinitiv Lipper US Fund Flows data, investors pulled roughly $68 million from municipal- bond funds last week which follows the prior week’s inflow of $775 million. Muni funds have added roughly $5.5 billion this year.

After having a strong January with munis returning about 2.87%, February has been a complete reverse of the previous month with munis being down 1.59% for the month. This past week, the short end was hit the hardest with the bonds maturing in 1-year saw their yields rise by 17 basis points on Wednesday alone as one-year munis crossed 3% for the first time since November of last year. With the sell off in munis, we did see muni-Treasury ratios rise, something we have been looking for since munis have become extremely expensive. Muni-Treasury ratios rose across the curve this past week with the short end rising by about 5% while the long end only rose by just 2%. This is something many have been waiting for since Treasuries have backed up in recent weeks while munis still held strong. It was just a matter of time for this to happen.

Municipal Supply: With the Presidents Day Holiday on Monday, the negotiated calendar will be very limited with an expected volume of just $2.5 billion. The largest deal being the $677 million City of New York General Obligation issue which AmeriVet will be part of the Selling-Group. AmeriVet will also be in the Massachusetts Housing Finance Agency as a Co-Manager which will include $95 million in tax-exempt bonds and $61 million in taxable bonds. AmeriVet will also in the $17 million Community Development Administration – Maryland Development of Housing and Community Development as a Selling-Group-Member.