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Munis outshined taxable bonds in April, driven by strong inflows and robust issuance, while solid state and local balance sheets continue to underpin credit. Find out more in this month’s Municipal Bond Market Brief.

Monthly Summary

  • The municipal bond market outperformed taxable benchmarks in April (+1.15%) compared with the U.S. Aggregate (+0.11%), U.S. Treasuries (-0.07%), and Corporate bonds (+0.45%).
  • New issuance is tracking more than 10% above 2025’s record pace, with a significant weighting to intermediate maturities. Fund flows remain strong and helped fuel relative outperformance for the month.
  • Credit fundamentals remain resilient as state and local reserves are in good shape and overall financial health is solid, despite some recent negative headlines on select state and local governments.
  • To learn more, see part one of our new research series from Jennifer Johnston (Director of Municipal Research): Research matters: The impact changing demographics have on the municipal bond market

WHAT ARE THE RISKS?

All investments are subject to certain risks, including possible loss of principal. Generally, investments offering the potential for higher returns are accompanied by a higher degree of risk. Bond prices generally move in the opposite direction of interest rates. Thus, as prices of bonds in a portfolio adjust to a rise in interest rates, the portfolio’s value may decline. 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. High-yield, lower-rated (junk) bonds generally have greater price swings and higher default risks. Municipal income may be subject to state and local taxes. Some income may be subject to the federal alternative minimum tax for certain investors. Capital gains, if any, are taxable.

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