Municipal New Issuance: Last week’s negotiated calendar totaled to $9.9 billion with the largest deal being the $1.4 billion Dormitory Authority of the State of New York issuance followed by the $548 million South East Energy Authority Alabama deal. Crowley Texas Independent School District issued $433 million in tax-exempt bonds.

Municipal Secondary Trading:  Trading for the week totaled to just under $36.44 billion with 58% of trades being dealer sells and the majority of the trading was done on Tuesday and Thursday. According to Bloomberg, clients put up roughly $5.19 billion last week compared to $5.55 billion from the prior week.

Municipal Spreads: Munis were once again weaker this past week as yields on 10-year notes rose by 22.5 basis points to 2.75%. With the sharp rise in muni yields, munis underperformed Treasuries as 10-year ratios are now yielding 68.07% of Treasuries compared to 63.82% from the prior week. The muni curve did steepen slightly this past week by .14 basis points to end the week at 65 basis points.

After two straight weeks of inflows, investors pulled about $990 million from municipal bond funds last week according to Refinitiv Lipper US Fund Flows data. This follows last week inflow of $550 million. With the downgrade on US Treasuries by Fitch Ratings this past week, investor confidence may wane.

This past week was tough for munis, particularly in the front end with yields rising by 29 basis points and hitting a 6 year high, while one-year munis hit an 11 year high of 3.22%. This marks the worst performance for munis in over three months. This sharp rise in rates has given us some reprieve in relative value as the ratios in the front end continues to be quite expensive as ratios in the front end continue to be in the 65% range when the typical average has been around 85%. With munis still trying to catch up to Treasuries after their downgrade, we should see ratio move higher to their average levels.

Municipal Supply: The negotiated calendar for this week will have an expected volume of about $7 billion with the largest deal of the week being the $1 billion City of New York General Obligation issuance which AmeriVet will be participating in the Selling-Group. Washington Metropolitan Area Transit Authority plans on selling $797 million. AmeriVet will be in one other deal this week as a Selling-Group-Member for the $369 million Triborough Bridge and Tunnel Authority issuance.