June 5, 2017

Following another strong week in the market, municipal bonds have reached the richest level in the 10-year spot, compared to Treasuries since last summer.  Municipalities announced $16.4 billion of redemptions and $33.5 billion of debt matures in the next 30 days. Given June is historically a large reinvestment month, available cash will exceed supply of bonds by more than $29 billion. For the week ending June 2nd, municipal bond funds lost $51 million in net outflows. The 7 weeks prior, net inflows to the funds totaled $3.6 billion. The 10 and 30 year MMD indices closed last week at 1.86% and 2.69%, down 9 bps and 11 bps on each scale respectively from the prior week. As of Friday, the percent of municipals to treasuries was 86.11% for the 10 year maturity and 95.73% for the 30 year maturity.  Treasury rates were also down with the 10 year treasury at 2.16% and the 30 year treasury at 2.81%, down 8.7 bps and 10.2 bps from the prior week.

The only single family issuer in the market last week was Maine State Housing Authority with a traditional housing structure for their 2017B Mortgage Purchase Bonds. The was also only one issuer in the multifamily market, the Virginia Housing Development Authority with a variety of serials and term bonds. Details for all of these transactions are included in this week’s Roundup.

Economic news this week includes Factory Orders, Labor Market Conditions Index, Job Openings & Labor Turnover Survey, Consumer Credit, Jobless Claims, Bloomberg Consumer Confidence, Money Supply, Wholesale Trade, Treasury Budget, FOMC Meeting Begins, Producer Price Index, Consumer Price Index, Retail Sales and the FOMC Announcement. Municipal volume for last week totaled $5.2 billion and this week’s supply is expected to climb to $7.3 billion. The 30-day visible supply is currently estimated to be $12.7 billion. This week the housing deals on the calendar include the following:

$134,610,000  Texas Department of Housing and Community Affairs

$18,000,000  Utah Housing Corporation

$15,000,000  Idaho Housing and Finance Association

$11,325,000  Los Angeles, CA