Municipal New Issuance: Last week’s negotiated calendar totaled to roughly $4.8 billion with the largest deals being the $873 million Illinois State Tollway Authority issuance followed by the $383 million City of Chicago taxable issue. Last week was the last significant sizable calendar as many issuers are done for the year.

Municipal Secondary Trading: For the second week of December, secondary trading totaled to roughly $47.7 billion with 51% of trades being dealer sells. We should expect to see light secondary trading this week as Friday will be an early close. According to Bloomberg, clients put up about $7.76 billion up for the bid with Tuesday having the most volume of bids-wanted.

Municipal Spreads: Munis continued to improve this past week with 10-year notes falling by 21 basis points, closing the week out at 2.33%. Just one month ago, 10-year notes were yielding 3.14%. During the final quarter of 2023, yields have fallen an average of 103 basis points, giving us one of the best quarters we have seen in decades. With rally in munis, we continue to see munis outperform Treasuries with 10-year munis now yielding 59.77% of Treasuries, compared to 60.23% of Treasuries a week ago. The muni curve did steepen slightly by 1 basis point to close the week at 93 basis points.

According to LSEF Lipper Global Fund Flows Data, for the third consecutive week in a row, investors pulled about $524 million from municipal bond funds. This follows last week’s outflow of $144 million.

Munis continue to enter rich territory as the muni-Treasury ratios continue to fall as the muni market continues to rally following suit of other fixed income products. Since the start of the rally on Nov 1^st, 10-year ratios have fallen by 15.65 percentage points, pushing us to just above the 52-week low of 59.61% which was reached on April 17^th. This rally only took us 44 days to reach our highs to just above our 52-week low signaling that many buyers are ignoring ratios and relative value and focusing solely on yields.

Municipal Supply: The negotiated calendar will be very small this week with an expected volume of about $1.3 billion, with the largest deal being the $840 million State of Connecticut issue which AmeriVet will be participating on the deal as a Co-Manager. The next largest deal of the week will be the $350 million California Public Finance Authority.