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AmeriVet Weekly Muni Snapshot

Municipal New Issuance: Last week’s negotiated calendar totaled to just over $6.67 billion with the largest deal being the $1 billion Texas Water Development Board deal followed by the $770 Florida Development Finance Corporation issuance. AmeriVet was part of two issues last week which were the $692 million New York City Municipal Water Finance Authority issue as a Selling-Group-Member and the $639 million State Public Works Board of the State of California issuance as a Co-Manager.

Municipal Secondary Trading: Secondary trading for the week totaled to just over $47.22 billion with 53% of all secondary trades being dealer sells. With yields rising sharply once again, we did see an increase in bids-wanted as clients put up over $7.65 billion in bids-wanted for the week.        

Municipal Spreads: Muni yields once again rose sharply this past week with 10-year notes rising by 28.4 basis points to 3.44%, surpassing the 52-week high which was back in October of last year. With rates climbing again, munis are stilling attempting to catch up to Treasuries. With the rise in yields, munis did underperform Treasuries again as 10-year ratio is now yielding 75.15%, one month ago that ratio was at 71.20%. The muni curve did flatten this past week by 4.2 basis points to end the week at 76 basis points.

According to Refinitiv Lipper US Fund Flows data, investors pulled about $1.2 billion from muni bond funds and this follows the prior week’s outflow of $27 million. This is the first time since the last week of May in which we saw outflows of over $1 billion. With rising yields continuing to rise, investors will continue to be skeptical of the markets as inflation continues to be a cause of concern for many investors. We should expect to see heavier outflows to continue which in turn should put more pressure on the market.

September was not to kind to munis as munis lost about 2.93% for the month, bringing year-to-date returns into negative territory for the first time this year as year-to-date returns are now at -1.38%. With the Fed signaling that rates will remain higher and for longer than expected, investors will continue to wait on the sidelines until volatility subsides. Since the start of September, yields have jumped over 57 basis points marking the worst month since September of last year. With munis finally catching back up to Treasuries, muni to Treasury ratios moved higher with the front end of the curve now averaging about 74%, and the long end now yielding 92%. Prior to this, the ratio was averaging about 69% on the front end and about 91% in the long end.

Municipal Supply: For first week of October, the negotiated calendar will have an expected volume of just over $6.7 billion with the largest deals of the week being the $1 billion San Diego County Regional Airport Authority issue followed by the $965 million City of New York General Obligation issue. AmeriVet will be a Co-Manager on the $56 million Metropolitan Pier and Exposition Authority issuance.