How muni credit and market conditions are shaping 2026 investment strategies
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The attractive cash flows that have characterized much of 2025 have created a strong “carry” component to performance, providing an offset to the principal losses as well as offering defensive attributes against shifting credit conditions. In my opinion, municipal security allocations in 2026 could possibly be rewarded as the potential for total return performance is quite real given the likelihood of lower, yet still present, market volatility and reasonable prospects for booking further “carry” attribution, particularly on the long end. This would provide protection against episodic erosion of principal. Of course, both monetary and fiscal policies along with economic developments have the ability to be very…
