Product Categories: Municipal Fixed Income

The Benefits of Active Management for Municipal Bonds

September 14, 2023 — The municipal market is in the best fiscal condition it’s seen in over two decades and liquidity reserves are at their highest levels on record. Despite the strong backdrop, it is imperative to understand where hidden or lesser-known risks reside and position portfolios to avoid those areas.

Municipal Fixed Income Perspectives — September 2023

September 14, 2023 — In this presentation, Sage answers the 4 big questions (outlook for macroeconomic growth, Fed policy, valuations, and investor sentiment) and illustrates our municipal fixed income positioning in the current environment.

Municipal Fixed Income Investment Strategy — September 2023

September 14, 2023 — Municipal Fixed Income Investment Strategy provides an overview of Sage’s market outlook and sector positioning.

Market Outlook

  • Despite revenue receipts continuing to slow, municipal issuers remain strong and well positioned in the event of an economic slowdown. Rate volatility and uncertainty are the biggest challenges for fixed income investors, as the market remains focused on economic data and Fed policy.
  • “Higher for longer” continues to be the overarching theme; however, rates seem to be closer to the top of the range. From a positioning standpoint, Sage is modestly long duration with a bias toward longer dated structures as the yield curve is inverted out to 10 years and positively sloped in the back end. Although valuations have recently compressed, Sage is still leaning into selective single A and BBB credits.

Muni Market – Halftime Adjustments for 2023

August 1, 2023 — It has been a good time to be invested in municipal bonds, and it may just get better. The first half of 2023 provided a strong technical environment that led to a significant net negative supply of municipal bonds as we saw higher demand for bonds along with a significant reduction in new issuance.

Municipal Fixed Income Investment Strategy — July 2023

July 11, 2023 — Municipal Fixed Income Investment Strategy provides an overview of Sage’s market outlook and sector positioning.

Market Outlook

  • The municipal credit environment continues to improve and currently exhibits multiple fundamental metrics that have not been this strong in over two decades. Post-Covid challenges related to inflationary pressure have permanently increased the cost of labor, goods, and services that will increase pressure on budgets over time. In addition, long-term challenges such as underfunded pension and OPEB funds will likely result in credit downgrades for those issues that continue to neglect those obligations.
  • Looking forward to the second half of the year, municipal returns are anticipated to be positive, despite some initial yield volatility, delivering 1.5% to 2.0% returns on income alone. Higher-beta credits will continue to outperform as the additional spread will improve both income and provide further price appreciation. With the Fed tightening cycle concluding soon, Sage will continue to add duration in longer-dated maturities since valuations are compelling in that area.

Sage Advice Quarterly Market Review 2Q23

July 10, 2023 — Heading into the back half of 2023, the prevailing narrative seems to be that we are slowing down but only gradually, which makes a soft landing possible but also keeps central banks hawkish for longer. This has allowed risk assets to run and has created some complacency toward macro headwinds in our view. We see a much more challenged back half as stimulus money runs dry and economies feel the increasing impact of restrictive monetary policy and tightening credit conditions. From an economic perspective, this should translate into a mild recession in 2024 in the US with some downside global risk.

Municipal Market Updates – the Good, the Bad & the Ugly

May 15, 2023 — Sage’s outlook continues to be positive for the municipal market, both from a credit quality standpoint and an economic cycle perspective. The following are updates from the municipal market for March and April.

Headline Risk Creates Opportunity for Muni Investors

May 15, 2023 — The municipal sector that has by far received the most controversial press coverage over the last 12 months is the healthcare sector. Included in the following insights are 5 misconceptions about the municipal healthcare sector and why prepaid gas bonds present good value now.