Municipal Market Weekly Update

Muni Market Still Firmly a Retail Focus

• Muni performance is mixed along the curve
• $20 trillion of cash/cash equivalents may need a home
• Muni market offer lists speaks to retail dominance

Talkin' Taxes

• Munis and U.S. Treasury directions diverge
• With OBBBA completed, exemption uncertainty fades away
• Some Muni sectors have post act headwinds

Don't Fear the Steepener!

• We have a bit of rally underway
• Muni curve had steepened at historical pace
• However, slowing pace leaves some ratios in play

High Absolute Yields Give Investors Reason Not to Reach too Hard for Credit

• Smaller Dealer Balance Sheets Start to Transform Market
• How Cheap Can Munis Get?
• Buyers Pump Brakes on Reaching for Yield

Taxable Munis Strengthen the Fixed Income Core

• Taxable Muni bonds provide strong core complement
• Muni Curve tells tale of two different markets
• Differing ratios reinforce Muni cheapness

Short Munis Got Big Reasons to Smile

• Short end of the curve offers compelling argument for value/return
• Municipals eager to narrow the performance gap vs Treasuries
• Supply wave looks to test 2024 high water mark

Turn of Spreads Set to Lure High Yield Muni Tourists

• President Trump signs into law the "One Big Beautiful Bill Act"
• Municipals fail to follow post tax bill rate dump
• High Yield Muni spreads look to normalize from cycle tights

Not Just Tax-Tortured Coasts Who Benefit

• Senate begins debate on provisions of the One Big Beautiful Bill
• Muni summer gets underway with heaviest cash flows of the year
• It is not just coastal tax burdened residents who benefit from Muni exposure