Investor concerns about inflation, rising yields and slower US economic growth, are likely to add volatility to the municipal bond market in the medium term and more dispersion across credits and sectors. While municipal credit continues to show strength, we believe the fundamentals of individual bonds will start to vary more widely as federal aid subsides. With volatility, though, comes opportunity. Overall, we think the current backdrop will create opportunities across the credit spectrum that may help to improve municipal bond portfolio yields.
