Weekly Muni Commentary
December 16th, 2024 | Q4
Daily Avg. Offering Line Items
Daily Avg. Notional Offered
CUSIPs Offered on TWD
Dealers Offering on TWD
Buy/Sell Ratio Trend
Bid Wanted Flow
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Municipals cheapened into Friday’s close but outperformed the broader sell-off compared to Treasuries. Tradeweb’s AAA evaluation on the 5y and 10y increased 13bp week-over-week, with the 30y rising 17bp. Its Treasury counterpart experienced larger increases, with yields rising 20bp, 22bp, and 26bp on the 5y, 10y, and 30y maturities, respectively. With a lighter supply week ahead, market participants will be eying the upcoming FOMC meeting for guidance heading into the new-year. CME futures indicate a strong probability of a 25bp cut, sitting at roughly 97%. Regarding muni performance, BofA noted "Among the exempt IG rating brackets, BBB returns are strongest MTD, outperforming single-A, which has the weakest return MTD, by 12 basis points. Note that GOs are modestly outperforming revenue bonds MTD, though for the YTD are underperforming by almost 80bp." The belly maturities are outperforming the wing maturities MTD, they said, adding the longest maturities have the strongest performance year-to-date.
Last week, the municipal market faced significant selling pressure reflected in a spike in bid-wanteds (BWs) and falling buy/sell ratios across all client bases. Wednesday marked the YTD high in BW volume routed to Bloomberg, with TWD experiencing the same trend across its retail, dealer, and institutional client segments. Buy/sell ratios fell for all groups: Retail fell to 2.2 (from 2.6 the week prior), Dealer to 0.6 (from 0.9), and Institutional: 1.2 (from 1.5). Barclays strategist Mikhail Foux highlighted the resilience of exempts during the recent sell off, noting, "Tax-exempts outperformed in the sell-off, proving the market's underlying strength, more so as this solid performance came on the back of yet another heavy supply week (likely the last one of the year). In the end the market has started to feel tired again, and investors have begun trimming their exposure, with bid-wanteds spiking to their highest level in more than a year."
Primary issuance for the week ahead is estimated for $2.5B: Most notably, New York City Transitional Finance Authority ($1.5B), National Finance Authority ($68mm – River Ranch Project), Hazelden Betty Ford Foundation Project ($66.95mm), Finance Authority of Maine ($45mm – Casella Waste Systems).
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Proportion of muni buys vs. sells by client type on the TWD platform.
For the avoidance of doubt, a ratio < 1 indicates net selling activity.
Relative number of bid wanted requests sent to the TWD platform by client type, indexed to the first month in the time series.
Number of municipal inventory line items available on the TWD platform daily by liquidity provider type.
Municipal notional (000s) offered on the TWD platform daily by liquidity provider type.
Number of unique municipal CUSIPs offered daily on the TWD platform daily.
Number of unique liquidity providers offering municipals daily.
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