Municipal New Issuance:  The first week of March continued the trend of having a light negotiated calendar with only $6.7 billion in volume being priced with about half of the issuance coming from just a few large issues. The largest deals for the week included the $1.3 billion New York City General Obligation bonds which AmeriVet was part of the syndicate, the $411 million University of California Regents revenue bond issue, while he University of Chicago also issued $350 million in taxable bonds but by using a corporate CUSIP. All three issues showed good demand even as rates have risen, which indicates that there is still investor interest for tax-exempt debt issuance.

Municipal Secondary Trading: Secondary trading volume which totaled approximately $30.6 billion with 51% of that directed to clients buying interest as investors took advantage of the recent market correction in both tax exempt and taxable bonds compared to rate levels early this year. According to Bloomberg, client bids-wanted totaled to around $3.66 billion for the week just slightly down from the prior week’s volume of $3.97 billion.

Municipal Spread: Municipal bonds had nice rebound for the week as the Bloomberg 10-year benchmark yield fell by 4.2 basis points to 1.008%, with overall yields still higher by 37 basis points versus one month ago. With the drop-in rates, we did see municipal bonds improve versus Treasuries are they are now 69% of Treasures compared to 79.67% a week ago but still far from what ratios were a month ago which was 60.51%. Although municipal bonds performance did improve this past week the municipal bond curve continued to steepen by 3.7 basis points to 170 basis points from 2-yr to 30-yr rates.

For the first time in four months investors pulled cash out of municipal bond funds as yields rose by the most since last April amid speculation that the economic growth will surge once the coronavirus pandemic is over. Investors pull roughly $605 million from those funds which was the first since Nov 4 breaking a streak of 16 weeks of inflows according to Refinitiv Lipper US Fund Flows Data. The outflows were expected as we had a sell-off last month as the 10-year yields jumped by 1.1% from a low of .66% back on Feb 11^th.

So far municipal bonds have been able to achieve small gains for the year while Treasuries and corporate bonds have both shown loses of 0.81% and 1.26% respectively. Yields on 10-year municipal bonds this week edged lower for the week falling just around 4 basis points for the week to 1.07%, yet comparable Treasuries rose by 14 basis points to 1.55 in the same amount of time. The spread relationships between municipals and Treasuries have shown that municipals have been able to remain a solid investor option even with the Treasury market selloff and helped tax-exempts outperform and have a better valuation when compared to their taxable counterparts.

Municipal Supply: The negotiated supply for the week will total to around $7.1 billion with 30-day visible supply at $10.8 billion still well below the averages of what we had back in 2020. With almost half of the issuance this week coming from only 4 deals, this shows that many borrowers are still waiting on the sidelines to issue to see a more stable rate environment and the impact of the proposed stimulus program. The largest issues for the week are the $1.8 billion State of California Various Purpose General Obligation refunding bonds, followed by the $573 million New York City Municipal Water Authority. There will also be a $416 million Massachusetts Port Authority revenue bonds consisting of AMT and Non-Amt bonds. AmeriVet will be part of three syndicates this week; The New York City Water, the State of California as well as the Massachusetts Port Authority.