Top of the Morning: Munis 2026 Outlook - On a strong foundation
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The CIO municipal research team drops by to share a 2026 muni market outlook, along with their performance expectations across muni sub-sectors. Featured are Sudip Mukherjee, Senior Fixed Income Strategist Americas, Ted Galgano, Senior Municipal Strategist Americas, & Jeannine Le
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4 itemsTop 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.
Top of the Morning: Munis in 2025 - Strength amid policy uncertainties
The desk anticipates a resilient performance from the municipal bond market in 2025, despite looming policy uncertainties. Per the full note [source], UBS's municipal bond experts project higher total returns accompanied by increased volatility, particularly favoring intermediate maturities of 12 to 22 years and higher credit quality issuers. While the rally in municipal bonds post-election has been encouraging, the desk is closely monitoring broader economic indicators that could impact risk sentiment and municipal performance as we move through 2025.
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