Municipal New Issuance: The final week of 2020 saw the negotiated calendar with very light new issue underwritings as only $316 million was priced the largest deal being the $100 million Pennsylvania Economic Development Authority AMT deal.

Municipal Secondary Trading: The final trading week of the year saw the lowest secondary trading volume for the year with only about $11 billion for the week with about 57% of the trading volume being from dealers selling to clients.  Along with the trading volume being down so were customer bids-wanted according to Bloomberg with only about $792 million in bids-wanted for the week.

Municipal Spread: Municipal yields for the final week of 2020 remained unchanged this is the third week in a row where yields saw limited movement. The 10-year Bloomberg yield remained at 0.686% and the 30-year Bloomberg benchmark yield remained at 1.325% as well keeping the municipal curve unchanged at 133 basis points. Although municipal yields remained unchanged for the week, their performance lagged relative to Treasuries for the week and are now yielding 74.89% compared to 74.29% a week ago but a still doing better than a month ago when they were 84.90% of Treasuries.

For 2020 municipal bonds experienced a volatile year as overall market performance will finish the year with returns of about 5.2% marking the seventh straight year of gains, with taxable bonds posting gains of about 10%. These gains seemed like a far reach back in March as the coronavirus pandemic sent municipal bonds to a record selloff rattling investor due to the possible fiscal fallout across the sector. With the help of the Fed and Congress overall interest rates fell to record low borrowing cost this year while municipal bond once again had a record year in sales with about $457 billion in issuance a 12.5% increase from 2019. Taxable bond issuance also saw a record year of issuance with $140 billion and municipal bonds that used a corporate cusip tripled to about $37.4 billion.

With the record low yields and sales investors added about $33 billion to municipal bond mutual funds although up for the year it was still down from 2019 of inflows of $90 billion. The $33 billion of inflows was a big bright spot especially since back in March we saw a record outflow if $42 billion in just a few weeks as fears about the coronavirus pandemic’s fiscal fallout spooked investors as they liquidated fund holdings which challenged portfolio managers to provide market liquidity sending yields soaring as well.

Municipal Supply: The negotiated calendar for the first week on 2021 will continue to be light with only $1.8 billion on the calendar with the largest deals being the $450 million School District #1 City and County of Denver and State of Colorado General Obligation followed by the $350 million New Jersey Economic Development Authority School Facilities Construction Bonds which AmeriVet will be a Co-Manager on.