High-yield municipal bonds posted their worst month since September 2023 as the securities struggle to recoup losses from the tariff-fueled selloff earlier this month.
The riskiest segment of the market underperformed investment-grade securities for the first time since December, posting a 1.8% loss in April, according to Bloomberg indexes. The tariff-fueled selloff hit high-yield particularly hard and in one week they recorded a 5% loss, the worst week since the pandemic.
After President Donald Trump announced his sweeping tariffs on April 2, panicked investors sold bonds as part of a broader shift to raise cash. Munis, alongside other asset classes, have been performing better since then, though the securities have been slow to recover.
Bloomberg Markets
By Aashna Shah and Amanda Albright
May 1, 2025