Municipal New Issuance: Last week’s negotiated calendar totaled to just over $9.86 billion with the much anticipated $2.2 billion Jefferson County issue leading the way with the deal being 11 times oversubscribed with approximately $26.5 in orders. The high demand for the issue prompted the issuer to price the 2053 bonds at 4.51% compared to when the initial offering yield was at 4.69%. AmeriVet was in the second largest deal of the week which was the $1.8 billion Massachusetts GO issue which also saw high demand.

Municipal Secondary Trading: For the second week of the year, we did see secondary trading pick up as trading totaled to just over $36.16 billion with 54% of trading being dealer sells. We did see clients’ bids-wanted pick up as well with clients putting up roughly $5.2 billion up for the bid according to Bloomberg.

Municipal Spreads: For the second week of the year, we saw muni yields relatively unchanged with yields on 10-year notes rising by just .6 basis points to end the week at 2.34%. With muni yields remaining relatively unchanged for the week, we did see ratio rise this past week with the 10-year ratio now yielding 59.51% compared to the prior week when the ratio was at 57.79%. We did see the muni curve flatten this past week by 8.2 basis points to 83 basis points.

According to LSEG Lipper Global Fund Flows data, municipal-bond funds saw a modest inflow this past week as investors added just $38.7 million to municipal-bond funds. This follows the prior weeks outflow of $558 million. These past few years, we have seen municipal-bond funds struggle with outflows.

Munis have struggled to get out of starting gate to start the year as munis are currently down .24% just two weeks into the start of the new year. This is a far cry from the prior month in which we saw record month-to-date returns for November and December. This weakness in the markets could be seen as a correction as ratios had been increasingly expensive compared to Treasuries over the past couple of years, especially in the front end.

Municipal Supply: With the Martin Luther King Jr. holiday on Monday, we should expect to see about $5.15 billion in negotiated supply with the largest deals being the $532 million California Health Facilities Finance Authority for Scripps Health followed by the $502 million Dallas Independent School District issuance. The Pennsylvania Turnpike Commission will be issuing $435 million as well.