May 4, 2022 — Municipal investors often sift through various issues that include underfunded pensions, a lack of market liquidity, and inconsistent financial disclosure. However, there is a new area of concern that is causing indigestion among market participants: political and corporate agendas.
Product Categories: Municipal Fixed Income
Municipal Fixed Income 1Q22 Market Review & Outlook
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.
There’s No Time Like the Present
March 29, 2022 — For investors considering municipal bonds, now is a good time to invest in the sector. Year-to-date (as of 3/25/22), the municipal bond index has experienced negative returns to the tune of 6.19%, its worst start to the year in more than 25 years.
Puerto Rico’s Fiscal Stability Hinges Upon Medicaid Interpretation
February 2, 2022 — In “A Muni Minute,” Sage explains the risks to Puerto Rico’s recently released fiscal plan, which heavily depends on how much future Medicaid funding is provided to the Commonwealth.
Municipal 4Q21 Market Review & Outlook
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.
The Hidden Tax Consequences of Owning Municipal Bonds
December 6, 2021 — While tax-exempt municipal bonds are often used as part of a tax-savings strategy, in some instances these bond proceeds can be included in an investor’s income tax calculation.
The More Things Change, the More They Stay the Same
December 1, 2021 — In “A Muni Minute,” Sage explains why recent ratings upgrades for the State of Illinois maybe short-lived and provides an alternative municipal option.
Uncle Sam Wants You! Well, Actually, Just Your Money
October 19, 2021 — Since the dawn of time, governments have relied heavily on the power of taxation to collect money and redistribute it to pay for public programs.
An Innovative Research Approach: Using ESG Integration to Enhance Risk Controls
October 14, 2021 — As the effects of climate change become more prevalent, the potential for unexpected and significant impacts to credit risk has increased for municipal issuers.
Municipal 3Q21 Market Review & Outlook
October 12, 2021 — With municipal valuations at or through fair value, Sage remains focused on maximum tax-free income, solid credit fundamentals, and favorable risk-adjusted returns. Current market conditions warrant patience and prudence when deploying funds as valuations are not broadly reflective of long-term fiscal challenges, despite the recent fiscal support. With the strong and persistent technical environment, Sage will maintain a slightly long-to-neutral duration tilt and will rebalance exposure if market conditions change.