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%.

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.

June 12, 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

• Tax-exempt yields remain near historic highs, and at a 30% tax rate or higher, municipal bonds are outyielding most other fixed income options.
• The 10s30s curve offers a generous +120 bps to purchase long bonds, so if extending duration is an option, the long end offers attractive term premium.
• A significant increase in new issuance should provide advantageous issuer level opportunities.

May 13, 2025  — When evaluating an investment in a tax-exempt security, like a municipal bond, investors might overlook that its yield isn’t directly comparable to that of a taxable security. The tax-equivalent yield (TEY) is the pretax yield a taxable bond must have to match the yield of a tax-exempt bond. The TEY allows for a fair comparison between taxable and tax-exempt bonds.

May 7, 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

• Tax-exempt yields remain near historic highs, and for investors at a 30% tax rate or higher, municipal bonds are outyielding most other fixed income options.
• For those that can extend duration, the long end offers attractive term premium, with the 10s30s curve offering a generous +100 bps.
• Security selection remains the area of best opportunity, while sector and credit spreads are fully valued, except for pre-paid gas bonds.

April 15, 2025 — Sage provides an outlook for the municipal market, including our sector views and positioning.

April 15, 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 Themes

• Municipal credit quality remains solid and continues to improve. For investors whose effective federal tax rate is 30% or higher, municipal bonds should be part of their fixed income allocation.
• Lock in higher yields now before market conditions change. Longer dated maturities offer the best value due to a steep yield curve — the 10s30s curve offers a generous 100 bps to extend duration.
• Sector and credit spreads are fully valued, except for pre-paid gas bonds, but security selection can still provide selective opportunities to add income.