Summary
– Taxable local-government bonds outperformed 2025 muni market amid supply-driven dislocations and compressed tax-exempt spreads.
– Record $271B issuance and inflation-driven infrastructure costs fueled taxable bond demand with 4.74% yields vs. 3.30% for tax-exempt counterparts.
– Steepened yield curves and attractive tax-equivalent yields (up to 8.01%) positioned taxable bonds as strategic alternatives to corporate debt.
– Strong credit fundamentals in healthcare/education sectors and inverted credit spreads reinforced taxable bonds’ appeal for rate-sensitive investors.
– Fed rate cut expectations and short-duration advantages suggest continued outperformance as investors rotate from cash to munis.
ainvest.com
by Oliver Blake·
Aug 10, 2025