MYI - Municipal CEF Market Update: A Much-Improved Valuation Profile

• 2022 has not been kind to municipal bonds so far with an unusually sharp drawdown to kick off the year, driven by persistent inflation and a hawkish Fed.
• Sector valuations in absolute yield terms, relative to Treasuries and in CEF discount terms, are all now much more attractive than they were in 2021.
• Fundamentals remain robust with a supportive supply picture and am improving fiscal stance.
• Rising leverage costs will be a key headwind for the CEF sector this year and higher Treasury yields remain an ever-present risk, though much is priced in already.
• We have made a number of rotations in our Muni Income Portfolio by shifting from "dryer-powder" holdings to take advantage of this dislocation.

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