Municipal New Issuance: With the holiday shortened week last week, the municipal market saw only about $3.3 billion of new issue supply, With the State of Colorado and the State of Connecticut both doing $500 million of bonds with the State of Connecticut doing a taxable deal. AmeriVet was also part of the selling group on 2 new housing deals the $159 million New York City Housing, and the $117 million Pennsylvania Housing.  The New York City Housing deal was slated to be about $181 million in bonds but was later downsized to $159 million as demand for the issue was small on the long end as those bonds were removed from the issue. The Pennsylvania Housing was also downsized slightly from $118 million to $117 million.

Municipal Secondary Trading: With a holiday shortened week municipals saw about $27.3 Billion in secondary trading, down from $38.6 billion in trades.  We also saw a drop in investors bid-wanted as we saw about $2.3 billion in bid-wanteds versus $3.125 billion according to Bloomberg bid-wanteds index.

Municipal Spreads: Last week we saw very little change in spreads as we were in a holiday shortened week. Municipals continue to outperform treasuries as the 10-year is now yielding 125.84% of treasuries up from 127.12% a week ago and 224.43% a month ago. This continued rally has investors pouring money back into muni funds as we saw about $1.1 billion come back to the municipal market. This is the third week in a row that we have seen an influx of cash come back to the municipal market. A far cry from what we saw in the first weeks of the coronavirus pandemic. As more money is coming in, prices have risen pushing yields on the short-end close to 0% as we are seeing top rated bonds due in 2021 yielding now 0.06%. In late march we saw those bonds yielding a 2.6%.  Many are confident that the Federal Reserve will intern once again to help with the liquidity crisis we had in March which also sent yields lower. As muni yields get closer to negative it should be interesting to see how the markets will react as the tax-advantage will be eliminated.

Over the few two weeks, the shorter end of the curve has outperformed almost twice the amount of the long end signaling a steepening curve.  Since April 22^nd bonds maturing between 0-3 years have their yields decline by about 72 basis points while the bonds maturing in 30 years have only declined by about 32 basis points.  As for year to date the three-year part of the curve has been the best performer returning about 1.49% versus the long end of 0.40%.

Municipal Supply:  For the first week of June we are expecting to see about $6.85 billion of supply.  Yale University will be doing a large $1.5 billion deal which will be run by Barclays, the New York City Municipal Water Authority will be selling $635 million of bonds which AmeriVet will be a selling group member.  The City of Riverside will also be issuing $430.9 million of bonds, and the Massachusetts Bay Transportation Authority will issue roughly $392.2 million. For the month of June, we should expect to see about $11.9 billion in new issue supply with about $37.2 billion in redemptions.