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May felt reassuringly pedestrian comapred to the
near-historic volatility that occurred in April as a result of President Trump’s “Liberation Day” tariff announcement, which now feels like a lifetime ago.

Clients have been reaching out to us for our view on the incredible market volatility the municipal bond market has experienced since the “Liberation Day” tariff announcement on Wednesday, April 2nd. To say volatility has been extreme would be an understatement.

In like a lion and out like a lion, beware the Ides of March. The month of March was unkind to municipal bond investors as the market became untethered from all other markets. As a result, municipals under-performed the US Treasury market significantly across the curve. As noted above, 10-year AAA municipal rates rose nearly 35 bps while 10-year UST yields were unchanged.

Positive performance for both the investment grade and high yield municipal indices continued in February as they returned 1.00% and 1.26%, respectively. That is the second straight month of outperformance for high yield and 11 out of the last 14 months dating back to the beginning of 2024.