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AmeriVet Weekly Muni Snapshot

Municipal New Issuance: With the FOMC rates decision back on Wednesday of last week, many issuers took a pause on issuing this past week as they waited to see how much the Fed would raise rates and if they will plan on having any more rate hikes. The negotiated calendar for the week totaled to just over $2.9 billion with one issue covering majority of the issuance which was the $1.49 billion Louisiana Local Government Environmental Facilities taxable issue which saw overwhelming demand and saw their bonds trading higher in the secondary markets after they were free to trade. The second largest deal of the week was the $502 million New York State Housing Finance Agency issue.

Municipal Secondary Trading: Trading for the week totaled to roughly $37.2 billion for the week with about 56% of trades being clients buys. With investor sentiment that the Fed will be done with their rate hikes, many jumped at this opportunity for higher rates. According to Bloomberg, clients bids-wanted last week totaled to $5.1 billion.

Municipal Spreads:  Munis continue their firmer tone as Treasuries continue to rally once more this past week. Yields on 10-year notes fell by 8.4 basis points to 2.31%. Munis were able to outperform Treasuries due to the late rally on Friday that lowered yields by 6.8 basis points across the curve. Debt maturing in 10-years is now yielding 68.49% compared to 69.7%. One month ago, that same ratio was 66.73%. With the yields on the short end getting the most attention from investors, we did see the muni curve steepen by 4.5 basis points to finish the week at 98 basis points.

Investors continued to pull their investments out of muni bond funds this past week to the sum of about $427 million according to Refinitiv Lipper US Fund Flows data. This follows the prior weeks outflow of $461 million. Investors have added roughly $1.31 billion to muni funds this year.

With the FOMC raising rates by 25 basis points to 5% on Wednesday, munis continued to be firmer as they followed the rally in Treasuries. Signs are pointing that the Fed is near the end of its work on inflation and we could even see the Fed cut rates later this year. This is positive news for munis as we have had record outflows of $152 billion and a loss of over 8.50% in 2022. With the end of the Fed’s hawkish tone nearing, this is positive news for the muni supply as supply continues to be at all time lows. Once the new issue volume picks up we should expect to see investor demand grow and expect to see opportunities for investors that we have not seen in years.

Municipal Supply: The negotiated calendar continues to be very light with an expected volume of just $3.6 billion with the largest deal being the $1.19 billion New York City GO which AmeriVet will be in the Selling-Group. AmeriVet will also be participating as a Selling-Group-Member for the $43 million New Hampshire Housing Finance Authority issuance. Michigan State Housing Development Authority is planning on selling $398 million which will include a taxable portion and the City of Los Angeles Department of Airports will seek to issue $299.9 million next week.