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May 25, 2018

Municipal bonds posted strong gains this past week, countering several previous weeks of sluggish activity. The recent run up in rates may have a part in motivating investors to look at bonds versus other investments, and near average tax-exempt/taxable bond ratios eliminates the worry of munis being overpriced. Global pressures helped create a flight to safety and quality bid for liquid global bond benchmarks. Specifically, the concerns in Italy, Turkey and Spain helped lower German Bund rates, which in turn sent U.S. Treasury bond rates lower as the yield premium for U.S. bonds versus the Euro area showed attractiveness. Treasury rates decreased for the 10 year treasury closing Friday at 2.93%, down 12.5 bps week over week. The 30 year treasury finished the week at 3.09%, down 10.6 bps from the previous Friday’s close. The 10 and 30 year MMD indices closed last week at 2.49% and 2.95%, down 6 bps and 12 bps on each scale respectively from the prior week. As of Friday, the percent of municipals to treasuries was 84.92% for the 10 year maturity and 95.38% for the 30 year maturity.

Single family issuers in the market over the last few weeks included North Dakota Housing Finance Agency, Oregon Housing and Community Services, Tennessee Housing Development Agency, Vermont Housing Finance Agency, North Carolina Housing Finance Agency, Pennsylvania Housing Finance Agency, South Dakota Housing Development Authority, and Georgia Housing Finance Agency. Issuers in the multifamily space included Alamito Pub Fin Corp (TX), Alaska Housing Finance Corporation, Maricopa Industry Development Authority, New York State Housing Finance Agency, Texas Department of Housing and Community Affairs, Maryland Dept of Housing and Development, Cuyahoga Met Housing Authority (OH), San Antonio Housing Trust Fin Corporation (TX), Illinois Housing Dev Authority, and Pittsburgh Urban Redevelopment Authority.

Economic news this week includes MBA Mortgage Applications, ADP Employment Change, GDP Annualized, GDP Price Index, Wholesale Inventories, Personal Income, Personal Spending , Initial Jobless Claims, Continuing Claims, Chicago Purchasing Manager, Pending Home Sales, Change in Payrolls, Unemployment Rate, and Markit US Manufacturing PMI.

This week the housing deals on the calendar include the following:

$90,615,000  Illinois Housing Development Authority
$49,195,000  Massachusetts Housing Finance Agency
$40,000,000  Maine State Housing Authority
$29,430,000  Housing Opportunities Commission of Montgomery County
$ 6,600,000  Escambia County Housing Finance Authority
$ 3,110,000  Minnesota Housing Finance Agency