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Taxable municipal bonds proved their resilience in the first quarter of 2026, outperforming other fixed income asset classes despite sharp rate moves and rising geopolitical uncertainty. With yields near historic highs, solid credit fundamentals and limited supply, we believe the case for municipals is strong.
Key takeaways
- Active sector selection in health care and transportation may capture additional yield that we believe more than adequately compensates investors for the underlying credit risk.
- Rebounding demand and limited supply are expected to favor municipal total returns through year end.
- The shape of the taxable muni yield curve, with narrowing yields featured on the long end, may reward investors who favor intermediate dated bonds.
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