Municipal Bond Investor Weekly - Raymond James

NOVEMBER 13, 2023

Municipal Bond Investor Weekly

High Net Worth Wealth Solutions and Market Strategies // Fixed Income Solutions

GINA FAY

THE WEEK AHEAD

Director Fixed Income Private Wealth

1.

The market will be focused on this week's inflation data, highlighted with CPI on Tuesday, PPI on Wednesday and Import/Export prices on

Thursday.

2. This week's municipal new issue supply is expected to reach ~$8 billion,

DREW O'NEIL

providing opportunities for investors with redemptions or cash balances ? next week's calendar will likely be light due to the Thanksgiving holiday

Director

shortened week.

Fixed Income Strategy

3. There are only 5 full trading weeks left until the end of the year ? don't wait

to put money to work or conduct year-end portfolio reviews.

MONDAY'S COMMENTARY Get Your Shopping Done Early Illustrative Portfolios

Page 2 Page 3

THE NUMBERS THIS WEEK

Yields were mixed last week. Treasury yields moved higher across the short and intermediate parts of the curve by 4 to 21 basis points while the long end of the curve inched lower by a few basis points. Municipal yields were lower across the board as the benchmark AAA curve finished the week down by about 10 basis points for all maturities.

Year

Treasury

Municipal (AAA)

Municipal (A)

Municipal TEY* (AAA)

Municipal TEY* (A)

Muni (AAA)/Tsy

Ratio

Muni TEY* (AAA)/Tsy

Ratio

1 2024 5.38 3.46 3.74 5.84 6.31 64% 109%

2 2025 5.04 3.39 3.70 5.73 6.25 67% 114%

5 2028 4.65 3.17 3.63 5.35 6.13 68% 115%

10 2033 4.61 3.25 3.84 5.49 6.49 71% 119%

20 2043 4.93 3.99 4.62 6.73 7.80 81% 137%

30 2053 4.73 4.22 4.81 7.13 8.13 89% 151%

*Taxable equivalent yield @ 40.8% tax rate

9.00

8.13

8.00

7.00

6.13

6.49

6.00

5.35

5.49

5.00

7.13

4.00

4.65

4.61

4.73

3.00

2.00 1

3 5 7 9 11 13 15 17 19 21 23 25 27 29

AAA Municipal TEY

A Muni GO TEY

Treasury

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MUNICIPAL BOND INVESTOR WEEKLY

GET YOUR SHOPPING DONE EARLY

Holiday shopping season is now upon us. This time of year advertisements are plentiful, highlighting deals on all kinds of goods as we prepare for holiday gift giving. Like consumer goods on sale for holidays, the bond market still has some of the best deals ? yields - we've seen in a long time.

While yields have come down from their recent highs, they are still near the highest levels we've seen through much of the last decade. The chart below shows AAA rated 10-year municipal bond yields since 2011. 10-year AAA rated municipal bonds are currently yielding 3.25%. A year ago, yields were similar ? but for just a short time. Prior to that, the last time yields were at this level was in 2011. Since then, the average yield on 10year AAA rated municipal bonds was 2.02% - 123 basis points lower than today.

Source: Bloomberg LP

Looking at the shape of the municipal bond yield curve, as can been seen in the chart on page one, investors are compensated for extending maturity beyond 10 years. A positive or upward sloping yield curve provides higher yields with each additional year of maturity. The spread ? or difference in yield ? between various maturities offers insight on which parts of the curve provide the most relative value by showing the flatness or steepness at different maturity ranges on the yield curve. As you can see in the chart below, the short end of the curve is still inverted as 1-year yields are higher than 5-year yields. Yields start to increase again after 6-years, and the steepest part of the yield curve is between 10 and 15 years. For investors with longer investment horizons, additional attractive yield pick-up can be achieved through 25 years.

Maturities 5yr - 1yr 10yr - 5yr

15yr - 10yr 20yr - 15yr 25yr - 20yr 30yr - 25yr

Source: MMD, Raymond James

Yield Curve Slope (bp) -30 8 51 24 23 4

What does this mean for investors? For clients with cash balances ? from redemptions, liquidity events, or portfolio rebalancing ? now is the time to invest and lock in yield for longer. Yields are at the highest levels in more than a decade, and we do not know how long they will be available as we've reached or are near the peak of the Fed rate hike cycle. Although we've seen yields at or near these levels a few times over the last decade,

they were only available for a brief period ? if history rhymes this time around, those trying to time the market may

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MUNICIPAL BOND INVESTOR WEEKLY

be left disappointed. There are only five full trading weeks until the end of the year ? and shortened trading weeks with Thanksgiving and Christmas holidays when the bond market is closed. Get your holiday shopping done early before time ? and deals - run out! ILLUSTRATIVE PORTFOLIOS Our illustrative proposals reflect three opportunities along the yield curve with bonds maturing from 1 to 20 years. As noted in our comments, last week was a volatile week, with yields once again moving lower. Strategically, for investors looking to lock in long-term, reliable tax-efficient cash flow, our duration focused 10?20-year maturity illustration continues to offer an excellent tax efficient solution. The average yield to worst is ~3.98%, which equates to a taxable equivalent yield to worst of ~6.71% for an investor in the top federal tax bracket and subject to the net investment income tax. If the callable bonds are not called, the yield to maturity increases to ~4.19%, which equates to a taxable equivalent yield to maturity of ~7.07%. This is a solution with 4-5% coupon bonds with an average coupon of 4.45% and a market price of ~$102.63. The current yield is ~4.34%. An investment with $1 million par value ($1.026 million market value) will generate a federally tax-exempt annual coupon cash flow of ~$44,500.

NAVIGATING TODAY'S MARKET According to The Bond Buyer, $8 billion in new issuance is expected to come to market this week. Some of the larger deal include: The New Jersey Transportation Trust Fund Authority (A2/A-/A) is selling $1.25 billion in transportation program bonds; the District of Columbia (Aa1/AAA/AA+) is bringing a $1.22 billion income taxsecured revenue bond deal to market; the Indianapolis Local Public Improvement Bond Bank (Aaa/-/AAA) is selling $155 million of ad valorem property tax-funded project revenue bonds; the Municipal Improvement Corp. of Los Angeles (Aa3/-/AA-) is issuing $194 million of lease revenue bonds; and the Virginia Housing Development Authority (Aa1/AA+) is selling $168 million of non-AMT rental housing bonds. See table below for additional new issuance.

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MUNICIPAL BOND INVESTOR WEEKLY

HISTORICAL YIELDS

6.00 5.00 4.00 3.00 2.00 1.00 0.00

Municipal AAA 10-Year

Municipal AAA 2-Year

Fed Funds (Upper Bound)

Date Amount

Issuer

11/13 $102MM Rome Building Authority (Georgia)

11/13 $122MM New York City Housing

11/13 $40MM Marshall School District

11/14 $14MM Wayne County School District

11/14 $10MM Upper Darby School District

11/14 $75MM State of North Dakota Housing

11/14 $40MM South Dakota Housing

11/14 $105MM South Dakota Housing

11/14 $4MM Providence Redevelopment

11/14 $8MM Providence Redevelopment

11/14 $60MM Oklahoma Housing Finance

11/14 $21MM City of Paris

11/14 $14MM City of McKinney

11/14 $25MM City of McKinney

11/14 $30MM City of McKinney

11/14 $54MM City of Bentonville

11/14 $15MM CDA Maryland Dept of Housing &

11/14 $2MM Brownstown Central Community

11/15 $13MM Wauconda CUSD 118 , (Lake

11/15 $120MM Missouri Housing Development

11/15 $253MM Massachusetts Housing Finance

11/15 $125MM Maine Health and Higher

11/15 $100MM City of Cape Coral, Florida

11/16 $39MM School District of Hatboro-

11/16 $48MM City of Columbia, South Carolina

11/16 $83MM City of Columbia, South Carolina

ST

Description

GA Revenue Bonds (Rome City Schools

NY Multi-Family Housing Revenue Bonds

MO Certificates of Participation

GA General Obligation Sales Tax Bonds,

PA General Obligation Bonds, Series of 2023

ND Housing Finance Program Bonds Home

SD Homeownership Mortgage Bonds 2023

SD Homeownership Mortgage Bonds 2023

RI Certificates of Participation (Port of

RI Certificates of Participation (Port of

OK Single Family Mortgage Revenue Bonds

TX General Obligation Refunding Bonds,

TX General Obligation Bonds

TX Taxable, Tax and Limited Pledge Airport

TX Taxable General Obligation Bonds, Series

AR Sales and Use Tax Bonds

MD Housing Bonds, Series 2023E (Non-Amt)

IN General Obligation Bonds of 2023

IL General Obligation Bonds

MO Single Family Mortgage Revenue Bonds

MA Housing Bonds, 2023 Series C,D,E

ME Revenue Bonds, Series 2023B

FL Water and Sewer Revenue Bonds, Series

PA Montgomery County, PA, General

SC Waterworks and Sewer System Revenue

SC Waterworks and Sewer System Refunding

Moody's/S&P/Fitch Aa1 /AA+ / (Aa2 /AA- / ) Aa2 /AA+ /NR /AA / ( /A- / ) BAM Aa1 / / (A1 / / ) A1 /AA / BAM

Aaa /AAA / Aaa /AAA / NR /BBB /NR NR /BBB /NR Aaa / / /AA / (Aa3 / / ) Aaa /AAA / Aaa /AAA / Aaa /AAA / /AA- / Aa2 / /AA+ /AA+ / ( /A+ / )

NR /AA+ /NR

A1 /AA /A+ AGM A1 /NR /A+ Aa1 /NR /NR Aa1 /AA+ /NR Aa1 /AA+ /NR

Maturity 3/1/25-44 11/1/2063 03/01/2025-49 9/1/2026 - 29 4/1/25-53

11/01/202411/01/20249/1/1953 9/1/1953 09/01/202412/15/2024-43 08/15/2025-44 08/15/2026-2044 08/15/2025-44 11/01/2024-46 01/26,07/01/202607/15/2025-30

11/01/2024-

7/1/24-53 10/1/24-53 9/15/25-51 2/1/25-53 2/1/24-38

This offering calendar is for information purposes only, and is not intended as an offer for solicitation with respect to the purchase or sale of any securities. For more information on the new issues go to .

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MUNICIPAL BOND INVESTOR WEEKLY

There is no assurance any of the trends mentioned will continue or forecasts will occur. Investing involves risk and investors may incur a profit or a loss. Past performance may not be indicative of future results. Prior to transacting in any security, please discuss the suitability, potential returns, and associated risks of the transaction(s) with your Raymond James Financial Advisor. This communication is not an offer to sell or a solicitation to buy any securities mentioned herein. High grade and High yield securities mentioned herein may not be suitable for all investors. A credit rating of a security is not a recommendation to buy, sell or hold securities and may be subject to review, revisions, suspension, reduction or withdrawal at any time by the assigning rating agency. All expressions of opinion reflect the judgment of the Fixed Income Municipal Department of Raymond James & Associates (RJA) at the time of publication and may be subject to change without notice. Information has been obtained from sources considered reliable, but we do not guarantee that the foregoing report is accurate or complete. Other departments of RJA or its affiliates may have information that is not available to the Fixed Income Municipal Department about companies or Issuers mentioned in this report. Further information on the securities mentioned herein is available upon request. Interest on Municipal Bonds is generally exempt from federal taxation and may also be free of state and local taxes for investors residing in the state and/or locality where the bonds were issued. However, bonds may be subject to federal alternative minimum tax (AMT), and profits and losses on tax-exempt bonds may be subject to capital gains tax treatment. Bonds are subject to risk factors including: 1) Default Risk - the risk that the issuer of the bond might default on its obligation 2) Rating Downgrade - the risk that a rating agency lowers a debt issuer's bond rating 3) Reinvestment Risk - the risk that a bond might mature when interest rates fall, forcing the investor to accept lower rates of interest (this includes the risk of early redemption when a company calls its bonds before maturity) 4) Interest Rate Risk - this is the risk that bond prices tend to fall as interest rates rise. 5) Liquidity Risk the risk that a creditor may not be able to liquidate the bond before maturity. High-yield bonds are not suitable for all investors. The risk of default may increase due to changes in the issuer's credit quality. Price changes may occur due to changes in interest rates and the liquidity of the bond. When appropriate, these bonds should only comprise a modest portion of a portfolio.

Sourced from Bloomberg: Treasuries: US Fed H15 CMT Curve - The H15 curve is comprised of the constant maturity treasury rates as published daily by the Federal Reserve in the H15 report. Municipal (AAA): BVAL Municipal AAA Yield Curve (Callable) - The curve is populated with high quality US municipal bonds with an average rating of AAA from Moody's and S&P. The yield curve is built using non-parametric fit of market data obtained from the Municipal Securities Rulemaking Board, new issues, and other proprietary contributed prices. The curve represents 5% couponing. The 3 month to 10 year points are bullet yields, and the 11 year to 30 year points are yields to worst for a 10-year call. Municipal (AA): US General Obligation AA Muni BVAL Yield Curve - The BVAL curve is populated with pricing from uninsured AA General Obligation bonds. Municipal (A): US General Obligation A+ A A- Muni BVAL Yield Curve - The BVAL curve is populated with pricing from uninsured A+, A, and Arated General Obligation bonds. Fed Funds (Upper Bound): The federal funds rate is the short-term interest rate targeted by the Federal Reserve's Federal Open Market Committee as part of its monetary policy. US Treasury securities are guaranteed by the US government and, if held to maturity, generally offer a fixed rate of return and guaranteed principal value. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance.

The illustrative portfolios are intended as a starting point for a conversation on individual bonds. They are not intended as specific recommendations and bonds are shown for illustration purposes only. The bonds listed in the illustrative portfolios are rated A or better, with average ratings from Moody's and Standard and Poor's of Aa2 / AA. The yields shown in the proposals are based on pricing models, not current market offers. Yields shown are indicative of general market levels but are not a guaranteed result. Prices and yields are not inclusive of any fees or commissions.

US Treasury securities are guaranteed by the US government and, if held to maturity, generally offer a fixed rate of return and guaranteed principal value. The Dow Jones Industrial Average (DJIA) is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange (NYSE) and the NASDAQ. The NASDAQ Composite is a stock market index of the common stocks and similar securities listed on the NASDAQ stock market. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance.

Investment products are: not deposits, not FDIC/NCUA insured, not insured by any government agency, not bank guaranteed, subject to risk and may lose value.

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Raymond James? is a registered trademark of Raymond James Financial, Inc.

M23-184726 through 4/28/26

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