May 6, 2022 — Despite the misconception that municipal bonds are facing elevated default risk, they remain one of the strongest asset classes in terms of credit quality. While the municipal bond index experienced one of the worst starts to the year in more than 25 years, negative returns are rare, and we believe now presents an excellent entry point.

April 13, 2022 — What a difference a quarter can make. The municipal market did a complete 180-degree turn from a technical environment and valuation perspective. Like clockwork, the negative feedback loop that results from negative municipal returns caused heavy mutual fund outflows to the tune of $30 billion, one of the largest on record in recent history. On a positive note, the broad market economic recovery continues to improve fundamentals as municipal issuers continue to experience higher-than-projected income and sales tax receipts, leading to an increase in tax rebates. Inflationary cost pressures are putting some fiscal strain on essential service revenue sectors; however, almost all municipal sectors continue to experience a post-Covid recovery environment, which should continue for the foreseeable future.

January 18, 2022 — The technical environment continues to support yields and spreads as mutual fund inflows totaled approximately $8.0 billion for the quarter and $82.6 billion for the year, which was the second highest on record. Although new issue supply came in at an all-time high of $475.3 billion, almost 30% came as taxable issuance, putting tax-exempt supply at $340.0 billion, which would be average issuance. Fundamentals are solid and continue to improve as the broad market economic recovery has contributed to higher-than-projected income and sales tax receipts. While essential service revenue sectors are dealing with higher input costs, they have been able to pass those costs onto end users. Corporate or quasi-corporate revenue sectors continue to experience a post-Covid recovery environment, which should continue into year-end.