Municipal New Issuance: With the Martin Luther King Jr Holiday on Monday, the negotiated calendar for the week totaled to just over $6.9 billion, with the largest deal being the $1.1 billion California Community Choice Finance Authority for their clean energy project. The second largest deal of the week was the California Health Facilities Finance Authority which issued approximately $913 million.

Municipal Secondary Trading: With just four trading days this past week, secondary trading totaled to just over $30.11 billion for the week with 52% of trading being dealer sells. With trading volume being down, clients’ bids-wanted was also down. According to Bloomberg, bids-wanted volume totaled to roughly $4.88 billion.

Municipal Spreads: For the third week of the January, we saw yields rise significantly with 10-year notes rising by 17 basis points closing the week at 2.51%. With yields rising, we did see muni ratios rise with the 10-year munis now yielding 60.10% of Treasuries compared to a week ago when the ratios were at 59.11%. The muni curve did flatten this past week by 2.1 basis points to 81 basis points.

According to LSEG Lipper Global Fund Flows data, muni bond funds saw investors add to roughly $898 million last week. This follows the prior week’s inflow of $38.7 million. This was the largest inflow into muni funds in almost a year and the market is potentially signaling a turnaround from two straight years of outflows.

Munis continue to struggle to start out positive for the year as munis are currently down by 1%, a complete 180 from the last quarter of 2023 in which we saw gains of almost 8%. We shouldn’t be to overly cautious with slight pull back as we have peaked from high rates and we await the long-awaited interest rate cuts, which could happen midyear. With the pull back in munis, once again we continue to see ratios trend higher with 5-year ratios now at 60.70%, 10-year ratios at 60.10%, and 30-year ratios at 82.60%.

Municipal Supply: The negotiated calendar will total to roughly $6.4 billion for the week with the largest deals being the $1.73 billion Regents of University of California, followed by the JEA Water and Sewer Systems who will issue about $529 million. AmeriVet will be one deal for the week as a Selling-Group-Member which will be the $150 million South Carolina State Housing Finance and Development Authority issuance.