The opportunity in municipal bonds in 2026 (Podcast)

The discussion highlights a resilient US economy in 2026, with modest growth, easing policy, and no recession in sight, creating a supportive backdrop for fixed income. Within that landscape, municipal bonds stand out as offering attractive relative value versus taxable credit, with wider spreads than corporates despite generally stronger average credit quality and stable fundamentals across most sectors.

After muni underperformance versus Treasuries and a pronounced curve steepening in 2025—especially in longer maturities—today’s opportunity is seen “out the curve and down the credit spectrum,” where valuations look most compelling on a taxable‑equivalent basis. A key forward theme is the potential rotation of elevated cash balances from money markets into longer-duration assets as rate cuts materialize, positioning munis to benefit from renewed demand. For advisors and investors who are subject to US taxes, professional management and vehicle choice—mutual funds, ETFs or SMAs—are framed as critical tools for capturing these opportunities while tailoring duration, credit risk and tax outcomes to client-specific objectives.