After a tough 2018, which saw the worst returns since 2013 for the municipal bond closed-end fund sector, January provided much-needed relief with a rally that wiped off most of last year's loss. Macroeconomic weakness that pushed rates lower and a turnaround by the Fed in light of sharply lower equities set the stage for renewed risk appetite across the board and a reversal in the widening of sector discounts in the previous year.
Source: ADS Analytics LLC, Bloomberg
In our view, there are further potential positive catalysts for sector performance such as relatively high