Top of the Morning: Muni Market Guide - Abundant supply tempers performance
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With the relaunch of the Municipal Market Guide publication series, Sudip drops by the studio to discuss performance trends across the muni market, along with a near-term outlook, and positioning views. We also spend some time spotlighting the Private Higher Education sector. Fea
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4 itemsTop of the Morning: Muni Market Guide - Leading the pack
UBS CIO argues municipal bonds have outperformed other US fixed income sectors year-to-date despite geopolitical uncertainty, rate volatility, and elevated supply. The key driver is record demand from inflows, redemptions, and coupon payments, which have more than offset an 11% supply increase versus last year. UBS expects inflation to ease and 10-year Treasury yields to fall to 4.25% by year-end. The desk maintains a constructive outlook on munis, citing resilient technicals and a favorable macro backdrop for the sector.
Top of the Morning: Muni markets - Policy matters
The desk views the municipal bond market as positioned for continued resilience amid evolving federal policies, with attractive yield spreads over Treasuries. Per the full note from UBS, while inflationary pressures and uncertainties around tariffs create short-term volatility risks, the expected tax-equivalent yields, especially in high-tax states, remain compelling. We highlight the yield advantage where in-state bonds exceed 7.5% after tax considerations, contributing to our barbell preference strategy outlined in the report.