Municipal New Issuance: For the fourth week of December the negotiated calendar was very light with only $350 million in negotiated issuance, with only one deal being over $100 million, that being the $100 million Dauphin County Pennsylvania Harrisburg University Revenue Bonds.

Municipal Secondary Trading: Trading volume for the Christmas Holiday week totaled approximately $16.8 billion down from the week prior of $37.6 billion as many traders are waiting for both new issue business and investor focus as we move into the new year. The majority of the trading was directed on client purchases with roughly 54% of investors doing the buying. According to Bloomberg client bids-wanted totaled to about $1.7 billion which was down from the prior week of $3.7 billion.

Municipal Spread: With the Christmas day holiday falling on Friday this year municipal bond yields for the week remained unchanged as with the 10-year Bloomberg benchmark yield remaining at .69% for the week which keeps the municipal bond curve unchanged at 132 basis points for the week. With municipals bond yields remaining unchanged for the week, and Treasuries rallying slightly municipal bonds lagged slightly and bond maturing in 10-years now yield 74.30% of Treasuries compared with 73.88% a week ago.

The municipal bond sector of the market experienced tremendous volatility this year with yields soaring back in March as the coronavirus pandemic struck the U.S. During the height on the pandemic 10-year yields soared almost 200 basis points to 2.88% in mid-March after beginning the month yields at 0.97%. Currently the 10-yr benchmark yield are 0.69% a complete reversal from the height of the market downturn. In the nine months since March the Federal Reserve Bank provided a relief package for cities and states and set up the Municipal Liquidity Facility program that allowed municipalities to borrow up to $500 billion in debt which only the New York MTA and the State of Illinois participated in. This program allowed borrowers to issue debt at rates below what the open market would price at. Once the Federal Reserve stepped in, borrowers and investors rushed into the market sending yields to record lows. 2020 saw a record amount of issuance for the year at $470 billion, up from 2019’s total of $411 billion. Investor demand remained strong with as mutual funds and ETF’s experiencing 33 weeks of positive inflows totaling in over $30 billion for the year.

Municipal Supply: The negotiated calendar for the final week of 2020 will be virtually nonexistent with only $19 million on the calendar. The largest deal for the week will be the $24 million Florida Housing Finance Corporation.