Yields rose across all fixed income assets due to expectations of swift Federal Reserve (Fed) rate hikes to curb run-away inflation, and munis were no exception. The “rich” valuations that we pointed out last quarter have turned firmly into our “cheap” range as a result of the selloff.

The selloff in munis was actually worse than that of U.S. Treasuries as the unprecedented muni mutual fund inflows in 2021 turned into unprecedented outflows to begin 2022. Selling pressure also resulted in credit spreads widening from historic lows.

We examine the effects of heightened volatility on funds vs. SMAs.

Part 3 of our Muni Market Education Series: The Risks of Callable Munis in Rising Rate Environments.

For more information:

Daniel Urbanowicz
Senior Portfolio Manager
Municipal Fixed Income
973-549-4335

Paul Clark, CFA
Senior Portfolio Manager
Municipal Fixed Income
415-364-2635