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AmeriVet Weekly Muni Snapshot

Municipal New Issuance: The negotiated calendar last week totaled to just over $8.2 billion with the largest deals being the $1.2 billion New Jersey Transportation Trust Fund Authority Fund issue, followed by the $1.1 billion District of Columbia issuance, and the Patriot Energy Group Financing Agency issued $795.8 million. AmeriVet was in two issues this past week which were the $124 million Massachusetts Housing Finance Agency issuance which AmeriVet participated as a Co-Manager and the $100 million New Hampshire Housing issue as a Selling-Group-Member.

Municipal Secondary Trading: Secondary trading for the first full week of November totaled to roughly $57.11 billion with 53% of trades being dealer sells. According to Bloomberg, clients put up roughly $9.17 billion up for the bid, up from the prior week’s total of $8.13 billion.

Municipal Spreads: For the third consecutive week in a row, muni yields fell with 10-year notes falling by 21.6 basis points this past week to close out the week at 3.05%. With yields falling once again, munis continue to outperform Treasuries as 10-year munis are now yielding 68.74% compared to the prior week when those ratios were at 70.23%. Although yields did fall, the muni curve did steepen this past week by 3.2 basis points to 90 basis points.

For the 11th consecutive week in a row, municipal bond funds saw investors pull their investments out of their funds to the sum of $235 million according to LSEG Lipper Global Fund Flows data. This loss follows the prior week’s outflow of $151 million.

The rally in munis in the past three weeks have pushed ratios to levels that we have not seen since start of the year. Currently, 10-year notes are hovering at around 69% of Treasuries which is down from 76% at the start of November, and at 68% on January 2nd. The 30-year ratio is at around 89%, down from 93% on November 1st, and 91% on January 2nd. Although this signals that munis are getting expensive, there is some upside to this as yields are about 50 basis points higher now than at the start of the year, something we have all been looking for these past few years. This rally could potentially push ratios even further as demand pics up and inflows come back to the markets.

Municipal Supply: With the Thanksgiving Holiday this week, the negotiated calendar will only have an expected size of just over $228 million with the largest deals being the $125 million County of Trumble Kentucky issue, followed by the $30 million New Hampshire Housing Finance Authority issuance which AmeriVet will be participating as a Selling-Group-Member.