Why Buy Municipal Bonds -

: Expected rate cuts by the Federal Reserve are likely to drive cash from money market funds back into longer-term, higher-yielding assets like munis.

: Bonds bought at a "market discount" may trigger capital gains taxes (de minimis tax), and some bonds may be subject to the Alternative Minimum Tax (AMT). why buy municipal bonds

Municipal Bond Market Report: 2026 Outlook Municipal bonds (munis) enter the second quarter of 2026 as a highly compelling option for income-focused investors, particularly those in higher tax brackets. The current market environment is characterized by , resilient credit fundamentals , and stable technical conditions that compare favorably to other fixed-income sectors like corporate bonds. 1. The Core Value Proposition: Tax Efficiency : Expected rate cuts by the Federal Reserve

: Analysts see specific value in pre-pay energy bonds and Low-Income Housing Tax Credit (LIHTC) bonds , which can offer yields 200–250 basis points higher than generic high-grade munis with similar default risks. 3. Municipal vs. Corporate Bonds Municipal Bonds Corporate Bonds Tax Treatment Generally tax-free (Federal/State) Fully taxable Credit Risk Historically lower default rates Higher risk of default Yield (Absolute) Typically lower Typically higher Yield (After-Tax) Often higher for top tax brackets Often lower for top tax brackets Volatility Lower volatility Higher volatility 4. Risk Considerations The current market environment is characterized by ,

: Despite a slower economy, state and local governments maintain strong liquidity positions and healthy "rainy-day" reserves to offset potential slowdowns.

: Investors should evaluate munis based on what a taxable bond would need to pay to match their return.

Experts expect the muni market to deliver solid performance throughout 2026, driven by several key factors: