After stormy weather, the sun may be shining on municipal bonds

In 2025, the municipal bond market has faced significant challenges, underperforming compared to other fixed-income indices due to record issuance and lingering investor concerns. Despite initial worries over policy changes and climate risks impacting municipal credit, many of these fears have not materialized.

As these uncertainties fade, the tax-exempt market appears poised for a rebound, with long-dated maturities offering promising opportunities for investors. The robust credit quality of many sectors and attractive relative value position municipals as a compelling investment choice in today's landscape.

With new issuance expected to decline by year-end, investors may find themselves well-positioned for strong returns as the technical backdrop improves.