Municipal New Issuance: The negotiated calendar for this past week totaled to just over $5.6 billion for the week with the largest deal being the $960 million Virginia College Building Authority issuance. The second largest deal of the week was the $277 million California Housing finance Agency issuance. We did see a few of the larger issuers postpone issuing this week such as the $700 million Triborough Bridges and Tunnels deal.

Municipal Secondary Trading: Trading for the week totaled to roughly $42.89 billion for the week with 55% of the trades being dealer sells and with majority of the trading being the front end. With the sharp rise in yields in the front end, it comes to no surprise that the front end had a lot of activity last week. According to Bloomberg, clients put up roughly $5.44 billion up for the bid, down from the prior week of $6.7 billion.

Municipal Spreads: After two weeks of muni yields being unchanged, yields rose with 10-year notes rising by 22.1 basis points to finish the week at 2.54%. Since the 52-week low on April 12^th, yields have risen by an average of 46 basis points. With yields rising last week, munis did underperform versus Treasuries as 10-year notes are now yielding 68.78% of Treasuries compared to the week prior when the ratios were at 68.29%. With the front end of the curve rising significantly this past week, the muni curve did flatten by 12.2 basis points to close the week at 63 basis points which is a 52-week low.

According to Refinitiv Lipper US Fund Flows data, investors pulled roughly $187 million from muni bond funds, this follows the prior week’s outflow of $102 million and marks the 14^th consecutive week of outflows. Although, we have seen 14 straight weeks of outflows, muni funds have had inflows of $3.8 billion for the year.

Muni bonds slid this past week as the fixed income markets sold off as the Fed hinted that the Federal Reserve may continue to raise interest rates. This caused the yields in the front end of the muni curve to jump by 27 basis points to hit our highest since mid-March. This jump in rates has pushed the month of May into negative return territory as prior to this sell off, munis were up .40% for the month but today were at now down to .46%. The front end of the curve has underperformed in the broader markets as it has only returned .67%, while long bonds have returned 3.43% year to date. This volatility in the markets has put pressure on the primary markets and has forced some issuers to postpone their deals.

Municipal Supply: Negotiated supply for the week will have an expected volume of about $5.3 billion with the largest issuances of the week being $674 million New Jersey Transportation Trust fund Authority, the $589 million City of San Antonio issue, and the City of Los Angeles Department of Water and Power issuing $485 million in refunding bonds.