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Monthly Summary

  • Measured against taxable benchmarks, the municipal bond market delivered mixed results in May, gaining +0.37%. By comparison, the US Aggregate returned +0.31%, US Treasuries posted +0.11%, while Corporate bonds led at +0.76%.
  • New tax-exempt supply currently exceeds 2025’s record-setting pace by more than 9%, with intermediate maturities comprising a notable share. Robust fund flows continued to support relative outperformance throughout the month.
  • Underlying credit quality holds firm, bolstered by healthy state and local reserve levels and solid overall fiscal conditions, notwithstanding isolated negative headlines surrounding certain state and local governments.
  • To learn more about the impact changing demographics are having on the municipal market, read parts one and two of our new research series from Jennifer Johnston (Director of Municipal Research): Research matters: The impact changing demographics has on the municipal bond market and The "Silver Tsunami" is changing municipal credit—here’s how.

WHAT ARE THE RISKS?

All investments involve risks, including possible loss of principal. Fixed income securities involve interest rate, credit, inflation and reinvestment risks, and possible loss of principal. As interest rates rise, the value of fixed income securities falls. Low-rated, high-yield bonds are subject to greater price volatility, illiquidity and possibility of default. Changes in the credit rating of a bond, or in the credit rating or financial strength of a bond’s issuer, insurer or guarantor, may affect the bond’s value. Derivative instruments can be illiquid, may disproportionately increase losses, and have a potentially large impact on performance. An investor may be subject to the federal alternative minimum tax, and state and local taxes may apply. Diversification does not guarantee a profit or protect against a loss.

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