Municipal bonds, one of the best performing fixed-income asset classes of 2023,1 started 2024 on a strong note, suggesting continued gains. However, the rally ran out of steam, in early January and municipal returns were generally flat thereafter.
Key takeaways:
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Source Barclays, as of January 3, 2024. Calendar year 2023 performance for calendar year is as follows: Bloomberg Municipal High Yield Bond Index, 9.21%; Bloomberg US Corporate High Yield Index, 13.44%; Bloomberg US Asset-Backed Securities Index, 5.54%; Bloomberg US Agency Intermediate Index, 4.90%; Bloomberg Taxable Municipal Index, 8.84%; Bloomberg Municipal Bond Index, 6.40%; Bloomberg US Credit Index, 8.18%; Bloomberg US Aggregate Bond Index, 5.53%; Bloomberg US Government Index, 4.05%; Bloomberg US MBS Index; 5.05%, Bloomberg Global Treasury ex US Index, 4.24%. Past performance does not guarantee future results. An investment cannot be made directly into an index.
Is now a good entry point for muni bond investors?
While the muni market hasn't performed as expected, the pullback may have created an interesting entry point for investors before the historically strong seasonal period.
Thoughts from the Municipal Bond Desk
Get expert insight on what’s happening in the muni market and munis by the numbers, a quick look at key data points, in the latest edition.
Five reasons why municipal bonds are compelling now
An improving macroeconomic environment, historically high yields, positive market technicals, investors moving out of cash, and robust credit fundamentals may drive muni performance.
Get the latest information and insights from our portfolio managers, market strategists, and investment experts.
Important information
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All fixed income securities are subject to two types of risk: credit risk and interest rate risk. Credit risk refers to the possibility that the issuer of a security will be unable to make interest payments and/ or repay the principal on its debt. Interest rate risk refers to the risk that bond prices generally fall as interest rates rise and vice versa.
Municipal securities are subject to the risk that legislative or economic conditions could affect an issuer’s ability to make payments of principal and/ or interest.
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