Munis were virtually unchanged in December, outperforming U.S. Treasuries, which sold off by 7-10 basis points (bps) across the curve. Market activity was subdued as issuance slowed in December but full-year issuance broke the record for highest ever. Credit spreads continued their dramatic narrowing as more government support is expected, especially with the likelihood of a Democratic Senate. So-called “problem” credits, such as the New York City MTA (which we’ve added to our spread tracking list on page 3), have seen the most significant narrowing. We continue to focus on high grade credits as underlying economic risks still exist and rates remain at historic lows, leading to limited upside potential.