Takeaways
– New York’s $34B budget deficit raises concerns over state-backed debt risks despite AA credit ratings.
– The 2025-26 budget allocates $254B, with 60% for Medicaid/education, while federal funding cuts threaten $10.1B in support.
– Municipal bond markets underprice structural risks, with narrow yield spreads and uncertain tax policy expiration by 2027.
– Resilient sectors like healthcare, education, and climate projects offer undervalued opportunities amid fiscal uncertainty.
– Investors should prioritize short-duration bonds, sector diversification, and credit derivatives to hedge against potential downgrades.
ainvest.com
by Henry Rivers
Friday, Aug 8, 2025 1:26 pm ET