Municipal New Issuance: The negotiated calendar for this past week totaled to just over $5.3 billion with the largest deal being the $1.1 billion New Jersey Transportation Trust issuance. The next largest deal of the week was the $495 million Los Angeles Water and Power Authority issue. With yields rising once again this week, we did see a few issuers postpone their deals until a debt deal is finalized.

Municipal Secondary Trading:  With an early close on Friday, trading for the week totaled to roughly $32.87 for the week with 55% being dealer sells. According to Bloomberg, clients put up $5.38 billion up for the bid, down slightly from the prior week when clients put up $5.44 billion in bids-wanted.  

Municipal Spreads: For the second straight week, yields rose sharply as there are continued concerns regarding passing legislation on increasing the debt ceiling. Yields on 10-year notes rose by 14.6 basis points this past week to finish the week at 2.68%. Since the beginning of the month of May, muni yields have risen an average of 30.2 basis points. With the rise in yields, muni ratios did rise as 10-year notes are now yielding 70.68% of Treasuries compared to 69.11% from the prior week. The muni curve steepened slightly this past week by 0.3 basis points to end the week at 64 basis points.

According to Refinitiv Lipper US Fund Flows data, investors pulled roughly $847 million from muni bond funds. This follows the prior week’s outflow of $187 million and marks the 15^th consecutive week of outflows. We should expect to see outflows continue until we start to see some stability in the muni market.

With muni yields sliding as much as 15 basis points this past week, munis have lost roughly 1.38% for the month bringing year-to-date returns of just 1.13%. Munis are on pace for their worst May since 1986. This negative return for munis is somewhat significant as the month of May is usually a positive month for munis. The month of May has only had two negative returns in the last 10 years, a loss of 1.3% in 2013 and a loss of 0.3% in 2015. With muni yields trending higher, we are starting to see ratios move closer to their 10-year average. However, they are still too rich to start moving to the front end.

Municipal Supply: With the markets closed on Monday in honor of Memorial Day, the negotiated calendar will have an expected volume of $5.9 billion, with the largest deal being the $1.4 billion New York City General Obligation issue which AmeriVet will be participating in the Selling-Group. The State of Connecticut will be issuing $710 million in taxable and tax-exempt bonds which AmeriVet will participate as a Co-Manager. In addition, AmeriVet will also be participating as a Co-Manager on the $104 million New Jersey Housing and Mortgage Finance Agency issuance. AmeriVet will also be participating in the Selling Group for the $106 million South Carolina State Housing Finance and Development Authority issuance.