Opportunities in the Municipal Bond Market by David Farris March and April have been volatile months for the municipal bond market.  Historically, Municipal returns have lagged in the month of march, tax season selling combined with a miss match of new issue supply and maturity reinvestment tend to push rates and Municipal/treasury ratios higher. True to form, municipal issuance increased 20% year over year for the month of March.  There was additional pressure on the market due to tax selling prior to April 15th, partially demonstrated by large municipal bond fund outflows.  Uncertainty related to the tax-exempt status of municipal bonds caused by continuing efforts to extend 2017 tax cuts also contributed to the pressure.  Combining all this with the additional volatility in the stock and bond markets due to the ongoing tariff negotiations caused municipal bond spreads to widen versus treasuries.   Spreads were probably at their widest around mid-April and while they have come in marginally as the markets have calmed somewhat, returns are still relatively attractive across the municipal curve.  Shown below in Exhibit 1 are generic AA-rated BQ municipal yields as of 4/28/2025.  Ratios to TSY range from 81% on the short end to 98% out on the long which are attractive historically.  Tax equivalent yields (TEY) along with the corresponding spreads to TSY also indicate good value in the municipal market.   For further information on opportunities in the municipal bond market please reach out to your Country Club Bank sales representative.

This information is intended for institutional investors only. The material provided in this document/presentation is for informational purposes only and is intended solely for private use. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instruments.

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