Why Munis Still Make Sense: Compelling Yields In A Changing Landscape

2025-05-15 08:59:00 ET

Summary

• Despite policy uncertainty, municipal bonds continue to offer compelling yields and experience strong investor demand, making them an attractive tax-advantaged income option in today’s market.
• Net flows remain solid: municipal bond ETFs saw $2.7 billion in inflows in April alone. The market may not be flashing bargain-bin yields like a month ago, but relative value persists - particularly for those seeking income without overcommitting to duration or credit risk.
• A 10-year AAA muni yielding 3.25% offers a taxable-equivalent yield of 5% for those in the top tax bracket. A 30-year AAA at 4.37% equates to 7.38% TEY.

Despite policy uncertainty, municipal bonds continue to offer compelling yields and experience strong investor demand, making them an attractive tax-advantaged income option in today’s market. ...

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