National Market Update Week of January 21, 2019

Transcription

1 National Market Update Week of January 21,

2 bps (%) Market Update * Commentary for the week of January 21 st U.S. government bond prices fell Friday after the Federal Reserve released data which indicated U.S. industrial production, a measure of factory, mining and utility output, increased 0.3% in December. The report brought some ease to recent investor concerns about economic slowdown and the pace of rate hikes. New York Fed President, John C. Williams, mentioned Friday at the New Jersey Bankers Economic Leadership Forum The economy is strong, the outlook is healthy, and my number one priority is using monetary policy to keep it that way. Furthermore, 99.5% of market participants anticipate the central bank will leave interest rates unchanged on January 30th. The current Federal Funds target range is 2.25% to 2.50%. On Friday the 10-year and 30-year Treasury yield rose three and two basis points to 2.78% and 3.10%, respectively, from Thursday s close. Furthermore, the 10-year and 30-year AAA Municipal yield gained one and two basis points to 2.21% and 3.06%, respectively, from Thursday s close. Municipal volume for this week is estimated to be $5.1 billion, down from the revised total of $6.59 billion of the previous week. The primary municipal calendar is comprised of $3.6 billion of negotiated deals and $1.5 billion in competitive sales. MMD to Treasury Ratios 125% 10Y MMD/10Y Treasury Ratios 20Y MMD/20Y Treasury Ratios 30Y MMD/30Y Treasury Ratios MMD Rates AAA 10 Y AAA 20 Y AAA 30 Y AAA MMD to BBB MMD Spreads 10Y AAA vs BBB MMD Spread Y AAA vs BBB MMD Spread 30Y AAA vs BBB MMD Spread 100% 85 75% 60 Source: * Bond Buyer Municipal Market Data Thomson Reuters TM3 1

3 ($bn) Market Update Calendar Week of January 21 st Issue Description Sale (week of) Par Amount ($000) Moody's S&P Fitch State of CT Health and Edu Fac Auth - Rev Bds, Ser. S, Ser. U-1 and U-2, Ser. 2010A-4 1/21 $ 535,865 Aaa AAA NR NJ Turnpike Auth - Turnpike Rev Bds, 2019 Ser. A IA Fin Auth - State Revolving Fund Rev Bds, Ser. 2019A and B City and Co. of Honolulu, HI - G.O. Bds, Ser. 2019A and B Co. of Miami, OH - Hosp Fac Improv and Ref Rev Bds, Ser /21 $ 426,000 A2 A+ A 1/21 $ 258,970 Aaa AAA AAA 1/21 $ 250,340 Applied For NR Applied For 1/21 $ 198,980 A2 A+ NR OH Hsng Fin Agency Ser. A 1/21 $ 150,000 Aaa NR NR Abilene ISD, TX - U/L Tax Schl Bldg Bds, Ser Board of Regents of Stephens F. Austin State Univ, TX - Rev Fin Sys Bds, Ser. 2019A and B(Taxable) Lake Travis ISD, TX - U/L Tax Schl Bldg Bds, Ser /21 $ 133,385 Aaa AAA NR 1/21 $ 109,385 A1 NR AA 1/21 $ 100,000 NR Applied For Applied For Marin CCD, CA - G.O Election 2019 B-1 1/21 $ 97,500 NR NR NR National Top 10 Total Negotiated Supply $ 2,377,745 National Total Negotiated Weekly Supply $ 3,666,500 Ratings* Bond Buyer 30-Day Visible Supply** Bond Buyer 30 Day Visible Supply Bond Sales Volume AAA MMD yield curve*** Jan Dec-18 Jan Thru 1/25/2019 Thru 1/26/2018 Thru 1/27/2017 Thru 1/29/2016 Total National Supply YTD $19,620,800 $14,413,000 $26,479,400 $25,725, Year *Rating reflects underlying or insured rating, as appropriate **Source: Bond Buyer ***Source: Municipal Market Data 2

4 Bond Buyer Indices vs. 30 Year Treasury: 30 Year History 1 BB 11 GO Index BB Revenue Index Year Treasury BB 11 GO Index BB Revenue Index 30 Year Treasury High Low Average Current Jan-87 Jan-89 Jan-91 Jan-93 Jan-95 Jan-97 Jan-99 Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13 Jan-15 Jan-17 Jan-19 Source: Bond Buyer 3

5 bps (%) (%) Tax-Exempt and Treasury Spreads: 1 Year History Bond Buyer Indices vs. 30 Year Treasury 5.00 BB 11 GO Index BB Revenue Index 30 Year Treasury 4.50 MMD Rates 3.50 AAA 10 Y AAA 20 Y AAA 30 Y MMD to Treasury Ratios 1.00 AAA MMD to BBB MMD Spreads 115% 105% 10Y MMD/10Y Treasury Ratios 20Y MMD/20Y Treasury Ratios 30Y MMD/30Y Treasury Ratios 10Y AAA vs BBB MMD Spread 20Y AAA vs BBB MMD Spread 30Y AAA vs BBB MMD Spread 90 95% 85% 75% 75 Source: Municipal Market Data Thomson Reuters TM3 Bond Buyer 4

6 Disclaimer This document is intended for discussion purposes only and, in conjunction with oral presentations and further negotiations, is subject to the final terms of definitive transaction related written agreements, if appropriate, and is not a commitment to lend money, underwrite or purchase securities or commit capital, nor does it obligate this firm to enter into written agreements. Terms and conditions described herein are an indicative summary which may be amended or replaced by subsequent summaries. This document is intended for the exclusive use of the entity identified on the cover page hereof or otherwise identified as the recipient by a member of the firm and may contain information proprietary to Estrada Hinojosa, which by acceptance of this document obligates you to use discretion when sharing the proposed terms for any prospective transaction. With this communication, Estrada Hinojosa is not assuming the role of your independent registered municipal advisor and is not attempting to establish a fiduciary relationship with you pursuant to the SEC s Municipal Advisor Rule. Estrada Hinojosa is acting in its own interests with a view to underwriting and distributing your municipal securities in an arm's length commercial transaction and you should discuss any action you intend to take with any and all internal or external advisors and experts that you deem appropriate before acting on this information or material In addition, Estrada Hinojosa does not provide accounting, tax or legal advice and any discussion of such matters herein should not be relied upon by you as a guarantee or commitment of a specific result should a transaction occur. All numbers and prices discussed herein are preliminary and indicative of market conditions on the date prepared and do not represent bids or offers, and you should determine, without reliance upon us, the economic risks and merits as well as the legal and tax consequences of any such transaction, keeping in mind that the results of analyses from any quantitative model which represent potential future events that may or may not occur, and that may not include every particular material fact related to a proposed transaction, are by their nature subject to further discussion and examination Estrada Hinojosa & Company, Inc. Member: FINRA & SIPC. All rights reserved. No part of this document may be reproduced in any manner without the written permission of Estrada Hinojosa & Company, Inc.