The municipal bond market is experiencing a positive shift, driven by a combination of stable fundamentals and an optimistic economic outlook. Recent commentary from Franklin Limited Maturity Municipal SMA highlights that while the municipal bond market recorded negative total returns in the fourth quarter of 2024, it still outperformed US Treasuries. This resilience is attributed to investor sentiment oscillating between optimism about a robust US economy and the potential for growth under a Republican-led government. The expectation of economic support from the administration is bolstering confidence in municipal bonds, despite concerns about fewer policy rate cuts from the Federal Reserve.
The Invesco Value Municipal Income Trust (IIM) ETF rose to $12.24, marking a 0.78% increase as of 10:01 AM ET on February 5th.