SUMMARY

  • Tax-exempt municipal bonds generated solid performance in January, with high yield munis gaining more than 2% on the month.
  • Municipal yields rose early in the month on expectations for higher rates and additional fiscal stimulus.
  • Although issuance was relatively light in January, the municipal market experienced strong demand, with four consecutive weeks of fund inflows.

Figure 1 is a market snapshot table displaying yield and spread data as of 31 January 2021 for municipal bond markets and U.S. Treasury markets in maturities of 2, 5, 10, and 30 years. It also displays year-to-date data on municipal market issuance, fund flows, and index returns. Key takeaways are discussed in the copy within the article.