Why I Still Like Municipal Bonds Heading Into Q2

2025-04-01 20:53:52 ET

Summary

• I see a bullish backdrop for municipal bonds due to elevated equity market volatility and the potential for lower interest rates in the future.
• Robust new issuance and liquidity in the muni sector indicate health and provide opportunities for investors to diversify and hedge against equity market downturns.
• Current muni yields are attractive, especially when considering tax-equivalent returns, making them a solid risk-reward proposition compared to equities.
• Equities remain overvalued despite recent sell-offs, reinforcing the need for hedges like munis to protect against further declines and capitalize on future Fed rate cuts.

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