Product Categories: Municipal Fixed Income

Municipal Risk Paradox: Safety and Risk Sectors Simultaneously Outperforming

July 30, 2025 — In a surprising twist, both high-grade and high-yield municipal bonds are outperforming — simultaneously. This rare alignment is challenging traditional market logic and signaling a structural shift in investor behavior. Discover what’s driving this municipal market paradox and what it means for portfolio strategy.

Municipal Bonds That “Put” a Little Extra Income In Your Pocket

July 28, 2025 — Bonds with mandatory put features — which require the issuer to repurchase the bond before final maturity — are gaining traction, offering investors an attractive yield premium. While these structures come with added complexity, they also present a compelling opportunity for those who understand how to manage the nuances. In this piece, we explore why these “puttable” bonds are trading at wider spreads and how savvy investors can capitalize on their income potential.

Core Municipal Strategy Profile 2Q25

The investment objective of this strategy is to minimize downside risk in any environment and maintain consistent quarterly after-tax total returns over an intermediate to long term investment horizon.

Municipal Fixed Income Investment Strategy, July 2025

July 16, 2025 — Sage provides an outlook for the municipal market, including our sector views and positioning.

Key Takeaways

  • Economic and Policy Landscape: Despite intermittent signs of weakness, the US economy remained resilient in Q2, prompting the Federal Reserve to hold rates steady, though softening indicators suggest easing may resume later in 2025 amid persistent market caution.
  • Market Performance: Municipal bonds underperformed in the first half of 2025, with both IG and HY indices posting negative returns due to rate volatility, heavy supply, April’s selloff, and fund outflows, despite the resolution of major policy uncertainty.
  • Municipal Outlook: Sage maintains a cautiously optimistic municipal outlook, favoring long-dated maturities amid expectations of a 10%–15% decline in new issuance in the second half of 2025, while trimming return expectations due to limited price appreciation and persistent short-term volatility driven by policy shifts and supply-demand imbalances—prompting a nimble approach to curve positioning and a recommendation to extend duration if 30-year Treasury yields exceed 5%.

A Muni Minute — Avoid Paying More for Less

July 11, 2025 — In fixed income markets, most investors are familiar with an inverted yield curve — when long-term bonds yield less than short-term ones. A similar phenomenon can occur with credit spreads, where longer-dated bonds offer lower spreads than shorter maturities. This is especially common in the municipal bond market and is primarily driven by a structural supply-demand imbalance.

Municipal Fixed Income Perspectives — July 2025

July 11, 2025 — This presentation provides an overview of our municipal market outlook and key themes, and it illustrates how Sage is positioned in the current environment.

Key Takeaways

  • Municipal returns have lagged but now offer better relative value.
  • By extending duration, investors can have historic term premium, with the 10s30s curve offering an extremely generous +137 bps yield advantage.
  • A supply/demand reversal by the end of summer will shift the current reinvestment dynamic to a buyers’ market.

Understanding the Hidden Risks in High-Yield Municipal Bonds

June 26, 2025 — Fixed income investors are often caught in a balancing act: the pursuit of higher yields versus the need to manage risk. In today’s environment, where investment grade municipal bonds offer modest returns, many investors are drawn to high-yield municipal bonds for their significantly higher income potential. Historically, this strategy has paid off — especially when investments are made through diversified, commingled funds that offer liquidity buffers.