CREDIT AND MARKET STRATEGY
MUNICIPAL MARKET WEEKLY
April 8, 2019
Muni Weekly Recap. Muni new issuance last week decelerated to $7.6 bil. from $9.7 bil. in the prior week, including negotiated offerings from Virgin Trains ($1.7 bil.), IL SRF ($450 mil.), MI SBLF, and Lee Memorial Hlth (FL). All transactions were well-subscribed and repriced with multiple/substantial bumps across most maturities. Fund inflows remained strong for the 13th consecutive week at +$713 mil. and +$15.89 bil. YTD (highest since 1992) as investors continued to buy tax-exempts amidst Federal tax changes. Secondary trading flows, including BWICs and trades, were slightly higher than average. Dealer inventories remain manageable at ~$16.5 bil. and are down -32% vs Jan 1, 2019. Despite the firm market tone, Muni yields were higher on the week in sympathy with Treasuries, which fell on risk-on sentiment sparked by optimism on better global growth...
This week. Weekly muni supply this week declines slightly to $6.7 bil, including a $2.1 bil. GO offering from California, $550 mil. Hunt Refining Co, $450 mil. NYC Water. Competitive transactions of $1.5 bil. are led by $224 mil. VA Trans. Gross issuance YTD is +$84 bil. (+18% YoY); however, we are projecting year-end gross supply at only +8% YoY ($341.8 bil.). The 30-day visible net supply is -$12.55 bil., comprised of...
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SAMUEL A. RAMIREZ & COMPANY, INC.
QUARTERLY MACROECONOMIC OUTLOOK
FINANCIAL STRATEGIES GROUP – 1st QUARTER 2019
Please find attached Ramirez & Co.’s Quarterly Macroeconomic Outlook. In our report, we continue to monitor the US economy, global events and the Fed’s outlook on the economy and rates:
- In 2018, with accommodative fiscal and monetary policies, and strong global growth, US real GDP grew at about 3% – somewhat above the economy’s longer-run growth potential, which the Fed estimates to be a bit below 2%.
- The FOMC begins to take a more judicious stance towards the future path of monetary policy – in light of the cumulative 225 bps tightening, 100 bps of which occurred in 2018.
- FOMC participants estimate that the neutral longer-run federal funds rate is in the 2.5%-3.5% range, whose lower bound is near the current rate.
- As the FOMC becomes more uncertain about the tightening effects of the balance sheet roll down, it begins to pay more attention to the maturity structure of the portfolio and the balance of Treasuries vs. mortgage-backed securities.
Members of our Financial Strategies Group, Niso Abuaf, Konstantin Semyonov and Duncan Sinclair, would be happy to discuss further any of the material with you.
Full Quarterly Report