The S&P Municipal Bond Investment Grade Index returned 0.40% in May, with stable yields leaving income as the primary driver of performance.
Other Highlights
- Rates and Curve Dynamics: Municipal yields were volatile but finished the month near starting levels, resulting in minimal impact from both parallel and non-parallel curve shifts
- Credit Spread Moves: bonds backed by the city of New Orleans experienced substantial spread tightening, while LA Metro Measure R Sales Tax Bonds widened
- Sector and Spread: Spreads tightened modestly overall, led by IDR/PCR and BBB-rated Transportation, while Resource Recovery spreads widened.
- Credit Quality Performance: A- and BBB-rated bonds experienced slight spread tightening, supporting returns across lower-rated segments
- State Performance: With limited curve impact, state-level performance was driven by spreads, with Alabama and Wisconsin outperforming and New Jersey lagging.
May’s performance highlights the continued importance of income and sector positioning in a low rate-movement environment.
Read the full report for an in-depth understanding of the contributions to the month’s performance.
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