Municipal New Issuance: For the first week of January, the negotiated calendar totaled to just $356 million in issuance with the largest deal being the $79 million Joliet School District #86 followed by the $61 million Truckee Meadow Water Authority issuance.

Municipal Secondary Trading: For the first week of the year, secondary trading was very light with secondary trading totaling to just over $26.8 billion. According to Bloomberg, clients put up just over $3.46 billion up for the week. We should start to see secondary trading pick up this week as the primary calendar will increase as well as traders returning back to their desks.

Municipal Spreads: For the first week of the year, munis rose with the 10-year notes rising by 7 basis points to 2.34%. This was the first time we saw yields rise since October 30^th. Although we did see yields rise, we did see munis outperform Treasuries with the 10-year now yielding 57.79% of Treasuries compared to the prior week when 10-year ratio was at 58.48%. We did see the muni curve steepen this past week by 1.3 basis points to 91 basis points.

According to LSEG Lipper Global Fund Flows data, investors pulled about $558 million from municipal bonds funds. This follows the prior week’s outflow of $463 million. With the holiday-shortened week in the municipal market, demand was very low.

Municipal bonds continue to be expensive when compared to Treasuries, falling well below the average of 85% for 10-year munis. Currently, 10-year munis are currently yielding 57.79% of Treasuries which has been the lowest since June of 2021, with the lowest this decade being 53.88% back on Feb 16^th, 2021. Although yields are still higher than they were at the start of the decade, investors are continuing to take advantage of this and not focusing on a relative value stand point compared to Treasuries. Investors should err on the side of caution as this rally is unsustainable and we are poised for a correction for this current rally that began on Nov 1^st. Since November 10-year munis have fallen 128 basis points which has also pushed ratios to near record lows.

Municipal Supply: Supply for the second week of January, the negotiated calendar will total to just over $8 billion for the week with the largest deal being the much-anticipated Jefferson County, Alabama which will be issuing $2.28 billion. The next largest deal of the week will be the $1.39 billion Massachusetts GO issue which AmeriVet will be participating in the Selling-Group.