Municipal New Issuance: The negotiated calendar for the week totaled to $7.6 billion which will most likely be the largest weekly issuance for the next couple of weeks as we head into the final weeks of summer and into the Labor Day Weekend holiday. There were only 2 issues for the week that were over $500 million which were the $756 million Main Street Natural Gas Supply Revenue bonds and the $529 million Pennsylvania Turnpike tax-exempt bonds which was downsized from its original size of $600 million.

Municipal Secondary Trading: Secondary trading for the week totaled to continues to be down with a total volume of $20.4 billion for the week. With yields being at or near their all-time lows this year secondary trading continues to be at its lows and if yields continue stay stagnant, we should continue to see trading volume low. According to Bloomberg, customers put up roughly $2.71 billion up for the bid which Is up from the prior week where customer bids-wanted was $2.03 billion. With the Labor Day Holiday weekend approaching we should expect secondary trading as well as bids-wanted down for the next few weeks.

Municipal Spread: For the third straight week municipal bond yields rose, with the 10-year benchmark yield rising by 3 basis points to 0.938%. Although, municipal yields rose they did manage to slightly outperform Treasuries for the week as the ratios is now yielding 71.98% of Treasuries compared with 72.29% a week ago but still lagging a month ago where the ratio was 67.41%. With yields rising the municipal bond curve did steepen by 1.9 basis points to 148 basis points from 145 basis points.

For the 25^th week in a row municipal-bond mutual funds saw a weekly gains as investors added $1.87 billion to those funds according the Refinitiv Lipper US Fund Flows Data. This follows last week gain of $1.83 billion increase with an average weekly inflow of just around $2 billion a week for 2021 for a total of $31.8 billion year-to-date. To put that in perspective last year’s total was $23.2 billion. High Yield funds continue to show large influx of cash with investors adding $524 million to those funds.

August has been labeled as one of the slowest trading months of year but August 2021 has been exceptionally slow and as a whole 2021 has been lowest in trading volume since 1999. Municipal bond trading volume is down 34% to $1.43 trillion in regards to par amounts. The one main reason for the lack of trading would be the influx on new cash that keeps on coming in from investors into mutual funds. With an average of about $2 billion of new cash each week since the start of the year many managers are deciding to hold onto their bonds for the yield and focus on purchasing new bonds which has been a facing stiff competition.

Municipal Supply: As we head into the Labor Day weekend, the negotiated calendar will be very light with just $4 billion in expected volume. There is only one deal that is over $500 million this week and it will be the New York City Transitional Finance Authority $950 million tax-exempt bonds which AmeriVet will be part of the syndicate. The New Hope Cultural Education Facilities Finance Corporation Sanctuary TLC Project will be issuing $483 million in tax-exempt bonds as well. The State of Wisconsin will issue $327 million in taxable bonds.