Fundamentals
- Municipal credit quality remains stable entering 2H2026, but signs of weakness are emerging across the education space and for some local governments amid a property tax backlash.
- Pension systems remain in solid condition, and the Iran war has had only a limited impact on issuers.
- Interstate tax competition, the artificial intelligence (AI) buildout, and the 2026 midterm elections are top of mind for clients (and we discuss them at length below), but each presents limited actionable credit calls, for now.
- California’s wealth tax ballot initiative may not pass, and if it does, would be difficult to implement.
Technicals
- Demand and supply remain in balance. Mutual fund and exchange traded fund (ETF) inflows have been positive each month in 2026 and are close to a year-to-date record, while supply has outpaced the last two years of record volume.
- Supply may slow in the second half of the year if interest rates stay on a higher-for-longer path and the Federal Reserve (Fed) raises rates. Higher rates will impact refunding volume, and issuers may delay borrowing and wait for policy clarity until after the midterm elections (hospitals, higher ed).
Valuations
- Credit spreads remain tight given strong demand and continued economic growth.
- Municipal/Treasury (M/T) ratios1 are low on a longer-term look-back but within recent ranges.
- The 2- to 10-year curve steepened during the first half of 2026 but may have further to go.
- There may be more opportunities within credit and ratio trades in the second half given the incrementally weakening fundamental environment and the potential for Fed-related rate volatility.
- Tax-equivalent yields remain near multi-year highs.2
Fundamentals
Ratings & Defaults
Nearly 95 percent of the debt in the Bloomberg (BBG) Municipal Bond Index3 is now rated A-/A3 or better.4 That’s a historically high figure and consistent with the market’s stable impairment trend and low default rate (See Figure 1).5
However, the upward ratings bias that characterized the market after the COVID-19 pandemic shows some signs of reversing. Notably, downgrades outpaced upgrades at S&P Global Ratings (S&P) in five of the six months through April 2026.6 Negative outlooks are on the rise at both S&P and Moody’s Ratings (Moody’s) (See Figure 2).
Weaker Education Sectors
Downgrades have been concentrated in education-related sectors, including charter schools, private higher education, and even traditionally safe, tax-backed public K-12 school districts.7 In our 2026 Municipal Market Outlook, we noted that the operating environment for education providers is pressured by a mix of factors, including enrollment declines (See Figure 3), competition from voucher programs, decreased immigration, poor fiscal management of one-time Covid-19 aid, property tax fatigue, and federal regulatory pressure.
Local Governments & Property Tax/Cost-of-Living Backlash
There are also signs of weakening in the local government sector. Notably, the three largest U.S. cities by population each experienced a negative rating action in 1H2026. Moody’s and Fitch Ratings (Fitch) placed New York City on negative outlook after the city forecasted larger-than-expected, spending-driven budget deficits. Moody’s downgraded Los Angeles on “weaker finances” and ongoing litigation over the 2025 Palisades wildfire. Fitch downgraded Chicago for its persistent budget gaps and entrenched political gridlock.
More broadly, local governments are having more difficulty increasing property taxes. At least 17 states considered property tax relief legislation in 2026.8 Relief measures lessen the tax impact of rapid home-price appreciation relative to incomes, since 2020 (See Figure 4). They are also a visible way for policymakers to address cost-of-living pressures. (Note that real wage growth has been flat since February 2025.9 The Michigan Consumer Confidence Index is at an all-time low, and the national savings rate reached a very low 2.6 percent in April 2026.10) However, property tax caps and limits tend to pressure budgets.11 The property tax is the largest source of tax revenue for many local governments.12
Still Solid Pension Health
Pension risk continues to subside in most places. The multi-year rise in equity market appreciation coupled with higher interest rates contributed to a reduction in unfunded liabilities for many issuers (See Figure 5). The funding ratio for the 100 largest public pension plans was 84 percent in April 2026.13 Going forward, pension risk is likely to be more issuer-specific and concentrated in cases where pension contributions comprise a large percentage of overall spending or where aggressive asset-allocation decisions lead to sharp asset repricing.
Manageable Iran War Impact
Higher oil prices tend to benefit oil-reliant states via higher severance tax collections (See Figure 6). New Mexico may collect $850 million more than expected for fiscal year (FY) 2026 (the current fiscal year).14 Alaska recently increased its revenue forecast.15
A federal gas tax holiday represents the war’s most immediate credit risk for munis. A gas tax suspension would negatively impact GARVEE (grant anticipation revenue vehicle) bonds, which are directly backed by gas taxes in the federal Highway Trust Fund (HTF).16 Fortunately, all legislation proposed to date would replenish any HTF shortfalls.
Three thematic issues that arose in conversations with clients year-to-date have mixed implications for investors:
a. Interstate tax competition and migration risk
Tax policy diverged meaningfully this year across states. In Washington, lawmakers enacted the state’s first income tax, a 9.9 percent levy on incomes over $1 million.17 In New York, lawmakers passed a property tax on New York City’s high-end nonprimary homes.18 In California, in November, voters may enact the nation’s first state-based wealth tax.19 In Minnesota, lawmakers are considering a wealth tax, though legislation has been tabled.20
By contrast, eight states lowered their individual income tax rates in 2026. This is consistent with a multi-year pattern in which more states lowered income tax rates than raised them.21
Growing tax policy divergence may weaken fundamentals in some higher-tax states, over time. Consider the following visuals.
States with higher tax rates have experienced an outmigration of residents over the past 15 years (See Figure 7).
Movers tend to be more affluent, which resulted in a net outflow of taxable income from higher- to lower-tax states (See Figure 8).
Foreign immigration has offset the loss of tax revenue and economic activity from departing residents (See Figure 9). But current policy calls for less immigration, not more. The outflow of taxable income may grow as a result.
The tax savings from moving has grown larger in some places. Take California and New York, which comprise a combined 32 percent of the intermediate-duration muni market.22 Since 2010, the combined effective local, state, and federal top income tax rate rose by 12.2 percent in California and 14.8 percent in New York City (See Figure 10).23
Notwithstanding the backdrop, Breckinridge cautions against anchoring investment decisions around tax competitiveness, alone.
First, recent migration trends reflect more than interstate tax differentials. They also reflect cost-of-living concerns, especially high housing costs. Many high-tax states are reorienting policy to address this problem, which may eventually blunt the pace of outmigration.24
Second, housing costs are not just a high-tax-state problem. Among the 20 counties with at least 500,000 residents and the most net domestic outmigration between 2023 and 2025, five were in states with no income tax (See Figure 11). Miami-Dade County, FL, lost nearly 7 percent of its domestic population since 2023. Its rental market is among the least affordable in the U.S.25
Third, high-tax states exhibit remarkably durable and high productivity relative to peers (See Figure 12). This reflects a mix of factors, including generally high educational attainment, a “hustle” culture in certain locations, and the “agglomeration” effects associated with population density in large urban areas.26 The capital and labor networks in Silicon Valley and New York City have generally powered their regional and state economies despite the loss of residents. The people and companies that remain generally have high incomes and capital to deploy. Aggregate state income in high tax states has typically grown faster than the net amounts lost to movers.27
Fourth, AI-related investment may supercharge productivity and tax receipts. Notably, job growth in the San Jose, CA, metropolitan area exceeded all but one of 25 metro areas in Texas in the 12 months through April 2026.28 Revenues outperformed budget projections in California, Massachusetts, and New York in the current fiscal year, and initial public offerings for OpenAI, Anthropic, and SpaceX may further increase near-term revenue in each state.29 Anthropic’s Claude app is utilized most in high-productivity states.30
Lastly, as we outlined in the 2026 Outlook, the credit backdrop for most states and local governments remains reasonably strong. State reserves are near all-time highs. Municipal debt is lower as a percentage of most state economies relative to pre-Covid levels. We think there are plenty of high-quality names to buy across states in the current environment, and this is likely to remain the case for quite some time.
b. The AI build-out
In our November 2025 perspective California Credit and the Risk of an AI Bubble, we highlighted several potential impacts to California and other municipal issuers from the AI transition. These included: (a) the risk of a stock market correction and the impact on public pension plans and tax collections, (b) the possibility that utilities procure power for underutilized data centers, and (c) the potential for professional-class job displacement.
To date, none of these risks has materialized. The S&P 500 Index has risen by 9 percent since November. Demand for data centers remains quite strong. Job openings increased in AI-exposed sectors (See Figure 13).
We are now focused slightly more on three additional AI-related issues:
- Ratepayer fatigue. Public support for higher utility fees may wane, weakening revenue bond coverage or liquidity. Seven in 10 Americans oppose the construction of data centers in their area.34 Larger majorities believe that data center owners and technology companies should finance their construction and energy needs.35
Tax base risks and opportunities. Local government credit quality may deteriorate in places where data center assets depreciate faster than anticipated and officials improperly forecast revenues.36 The risk grows where a large data center comprises an outsized share of a small town’s tax base.
By contrast, where tax breaks are not renewed, local government credit quality may improve.37 Many data centers benefit from tax exemptions that are likely to be removed, eventually.
- Cyber risk. The release of Anthropic’s “Mythos,” a general-purpose, frontier AI model that has located security vulnerabilities in “every major operating system and web browser, suggests new vulnerabilities for municipal issuers may be at hand.38 Several issuers have suffered material attacks in recent years, including Suffolk County, NY (2022), Baltimore, MD (2019), and Atlanta, GA (2018). The attacks cost the issuers $25 million, $18 million, and $17 million, respectively.39
c. Midterm Elections
A range of indicators seem to suggest that Democrats are likely to retake the House of Representatives in the November midterm elections. The president’s net approval rating is low at about 19 percent, a level that typically foreshadows significant midterm House of Representative losses for his party.40 Democrats retain a lead on the generic ballot, which is also correlated with midterm election wins, even after adjusting for recent gerrymandering (See Figure 14).41 The share of voters identifying as Democrats (or Democrat-leaners) is on the rise.42 Democratic candidates outperformed expectations in most special elections over the past 18 months.43 Republicans retain a slim five-vote majority in the chamber.
However, the Democrats’ polling advantages may be insufficient to retake the Senate. Republicans currently hold 53 seats, 51 of which are widely acknowledged to lean Republican.44
There are also reasons to expect some races to tighten over the next few months. Republicans are well funded.45 There are nascent signs of economic improvement. Gerrymandering may be more meaningful than anticipated (See Figure 15). As a party, Democrats are less popular than the president.46
Figure 16 highlights select investment implications from the most probable midterm election outcomes.
In scenarios where Democrats take the House, Senate, or both, we anticipate a marginally improved credit runway for hospitals, states, and private higher education issuers. Some Medicaid cuts, which would reduce hospital revenue and could pressure state budgets, are likely to be delayed or restored. Similarly, research universities are likely to benefit from a more reliable funding environment.
A wave election in favor of Democrats creates potential for a broader range of outcomes. One likely scenario: budget negotiations become contentious and a government shutdown ensues, slowing the economy.
However, we are open to surprises. For example, a wave election might create conditions for higher marginal tax rates. President Trump previously supported higher rates on the wealthy.47 Last year, 18 Republican senators supported higher marginal tax rates to fund rural hospitals.48 A filibuster-proof majority for higher marginal rates might be achievable, in connection with certain spending priorities and a perceived voter mandate. Tax-free municipal interest could become more valuable.
In scenarios where Republicans retain control of both houses of Congress, the administration’s existing policy prerogatives are likely to become more entrenched. For municipal issuers, this outcome could herald a more austere federal funding environment. Some of the proposed cuts in the president’s budget are likely to materialize (See Figure 17).
Restrictive immigration and trade policy are likely to remain largely unchanged. The executive branch retains broad authority over both policy domains. Congress recently codified some administration priorities in a multi-year immigration-funding bill.49 The Supreme Court limited the most aggressive tariff policies in its February 2026 decision, Learning Resources v. Trump, but some executive levers over tariffs remain.50 The current policy stance is likely to maintain pressure on input prices and wages, though the outcome of the Iran conflict and gas prices are likely to have a greater impact on the Fed’s interest rate policy.
At least two state ballot initiatives are worth monitoring:
California’s wealth tax. Current polling suggests there is slight majority support for enacting a one-time, 5 percent state wealth tax on individuals and trusts worth $1 billion or more.51 If the measure passes, an outflow of some very high-income taxpayers and a slower rate of capital formation is possible, over the medium term. However, we believe support for the measure is likely to wane over the ensuing months. Contentious ballot measures tend to lose public support in the months leading up to the November vote, and Governor Newsom is rallying an unusual coalition against this one.52
Even if the proposition passes, there are legal and practical hurdles associated with implementation. Proposition supporters require 50 percent approval to enact the measure (for more, see Wealth Taxes, Public Benefit Fraud, and What Matters for Muni Bonds).
- Florida’s property tax relief initiative. The “Save our Homes from Excessive Property Taxes” ballot measure amends the Florida constitution to exempt from property tax the first $250,000 of each home’s assessed value (excluding school taxes).53 It also narrows permissible uses for property taxes and limits future assessments. The measure requires 60 percent approval to pass, which we believe is unlikely. However, if voters approve the amendments, local government credit fundamentals may weaken across the state.
Technicals
Demand for tax-exempt municipal bonds remained strong during the first half of 2026. Inflows into both mutual funds and ETFs were positive for every month of the year through May and are close to a record (See Figure 18). As we outlined in our 2026 Outlook, munis benefit from several technical supports: (a) the baby boom generation is retiring at an accelerating pace and needs a safe, tax-advantaged, fixed income solution, (b) the household sector is generally underweight bonds, and (c) technology improved the steadiness of demand for small trade lots, which are often purchased into separately managed accounts (SMAs).54
Supply is strong and currently on pace for another record year (See Figure 19). Hospital issuance is up 36 percent year-to-date through May 2026.55 Electric power is up 26 percent. Both sectors exhibit stable credit characteristics this year and a meaningful backlog of infrastructure needs. Combined, these sectors are 11 percent of the intermediate market.56
Another driver of supply is the ongoing increase in energy prepay issuance (See Figure 20). Energy prepay bonds help finance the purchase of long-term gas or electricity supply for public utilities. Prepays are structured product-like securities that involve a mix of underlying contracts and multiple parties. But at bottom, prepay credit quality is guaranteed by a corporate obligor, typically an investment bank or insurance company.
Prepays offer higher tax-free yields than traditional municipal debt owing to the bonds’ weaker liquidity, complicated structures, mandatory puts, and corporate security pledges. Prepay securities with more complex structures and less liquidity may be poorly aligned with the needs of high-quality, safety-oriented SMA investors. However, in a diversified vehicle where liquidity is less of a concern, these securities can provide value due to their higher tax-exempt yields.
We anticipate a slower pace of supply over the next few months. The recent uptick in interest rates and a more hawkish Fed may slow the rate of issuance while hospital and education providers may wait until after the midterm elections to issue, given Medicaid and education-related regulatory policy could change.
Valuations
Opportunities in the second half of the year may stem more from credit picking and ratio trades than from duration-related strategies. The slope of the curve from 2 to 10 years steepened slightly but the yield curve from 10 to 15 years flattened year-to-date, suggesting little value in moving beyond 10 years. We believe the 30-year range offers the most compelling part of the curve for less duration-sensitive investors. Tax-equivalent yields remain near multi-year highs.
Credit
As outlined above, the credit outlook is stable, but weakening incrementally. Spread widening is possible on a name-specific basis, as the year progresses. Spreads moved little in the first half of the year based on rating category (See Figure 21).
Where we saw spread movement, technical factors played a larger role than credit concerns. For example, strong demand for California paper caused the state to trade through the AAA scale, despite its long-term structural deficit (See Figure 22). New York City yields rose in March 2026, mostly because most New York-biased accounts already held enough city paper.
Ratios
M/T ratios seem likely to remain in the current range or go lower in the second half of the year. Ratios are lower than in late 2025 and early 2026, but higher than in early 2024 (See Figure 23). If supply slows, which we believe is possible, they could tick down further.
Duration
The municipal AAA curve steepened in 1H2026, as investors became more concerned about entrenched inflation and the potential for higher interest rates (See Figure 24). Heightened uncertainty stemming from the Iran conflict, the path for inflation, and new Fed Chair Kevin Warsh suggests there is potential for more curve steepening. We remain cautious about extending duration and note the average 2-year/10-year weekly spread has been 93 basis points since 2011, above the current 50 to 60 basis point range.57
For yield-oriented buyers, absolute tax-free interest rates remain at decade-plus highs (See Figure 25).
[1] The Municipal/Treasury (M/T) ratio compares yields of municipals bonds with those of U.S. Treasury bonds of the same maturity. M/T ratios can show the relative value of municipal bonds compared with taxable bonds, by indicating when yields for municipal bonds exceed the after-tax yields on taxable bonds.
[2] TEY assumes the highest federal tax rate of 37% plus an additional 3.8% net investment income tax for a combined rate of 40.8%. TEY for investors in lower tax brackets will be less than what is presented. Breckinridge is not a tax advisor and does not provide personal tax advice.
[3]The BBG Municipal Bond Index is an unmanaged index considered representative of the broad market for investment-grade municipal bonds. Bonds in the index have remaining maturities of at least one year. You cannot invest directly in an index.
[4] Index data from Bloomberg/Barclays Broad Market Index, using lowest of S&P and Moody’s ratings, as of May 21, 2026. Federal bankruptcy data per the U.S. federal court system.
[5] Municipal Market Analytics, May 20, 2026 Default Trends report.
[6] Breckinridge analysis of monthly S&P “Public Finance Rating Activity” data, May 2026.
[7] For example, the charter school impairment count reached 31 in May 2026 per Municipal Market Analytics’ database. This is the highest count on record, even though there are seven more months in 2026.
[8] This includes states with many issuing local governments such as Florida, Georgia, Michigan, and Ohio. Estimated aided by AI-driven search.
[9] Per the Bureau of Labor Statistics, real average hourly earnings for all employees was $11.24 in February 2025 and $11.25 in April 2026.
[10] St. Louis Federal Reserve (FRED) data and Bureau of Economic Analysis. The personal savings rate in April 2026 was the 29th lowest on record, going back to January 1959, on a monthly basis (808 months).
[11] “State Property Tax Reform Efforts Continue Amid Local Fiscal Strains,” Pew Charitable Trusts, February 24, 2026. Available at: https://www.pew.org/en/research-and-analysis/articles/2026/02/24/state-property-tax-reform-efforts-continue-amid-local-fiscal-strains.
[12] Tax Foundation, Property Tax Relief & Reform, 2026. Available at: https://taxfoundation.org/research/state-tax/property-tax-relief/.
[13] Milliman Public Pension Funding Index (April 2026). Available at: https://www.milliman.com/en/insight/public-pension-funding-index-april-2026.
[14] Per the legislature’s budget and accountability office as cited by the AP. https://apnews.com/article/new-mexico-strait-hormuz-oil-haaland-bregman-79d4fe226494eb79aca6b4bb92e5c6a0.
[15] Alaska Department of Revenue Spring 2026 Forecast, March 2026.
[16] For example, like the bill proposed by Senators Kelly and Blumenthal in Spring 2026. https://www.congress.gov/bill/119th-congress/senate-bill/4032/text.
[17] Washington’s millionaire’s tax law remains subject to litigation. Notably, the Washington constitution has been interpreted to bar progressive income taxes. The millionaire’s tax was structured to work around this prohibition by characterizing “income” as something that is “received” as opposed to a “form of property”. In 2023, the Washington State Supreme Court permitted an “excise” tax on the receipt of capital gains income on the grounds that such income was not a form of property. The court may rule in the same fashion after hearing arguments on the new, progressive income tax rate. See: “Historic millionaire’s tax and other important changes enacted in Washington,” Baker Tilly, April 7, 2026 (https://www.bakertilly.com/insights/washington-millionaire-tax-and-tax-updates) and https://nslawgrp.com/washingtons-proposed-millionaires-tax-2026-update-and-legal-analysis/.
[18] Passed as part of New York’s state budget, on May 28, 2026. The tax would eventually be imposed on properties worth $5 million or more with tax rates beginning at 0.8 percent and rising to 0.3 percent as the value of property rises.
[19] See: “California One-Time Wealth Tax for State-funded Healthcare, Education, and Food Assistance Programs Initiative.
[20] “Minnesota Wealth Tax Proposal Stalls in 2026 Session but Expected to Reemerge in 2027,” Lathrop GPM. https://www.lathropgpm.com/insights/minnesota-wealth-tax-proposal-stalls-in-2026-session-but-expected-to-reemerge-in-2027.
[21] See various Tax Foundation analyses at: https://taxfoundation.org/research/all/state/2026-state-tax-changes/ and https://taxfoundation.org/blog/state-income-tax-trends/.
[22] Per the BBG Municipal Bond 1-10 Year Blend (1-12 Year) Index, as of June 12, 2026. The BBG Municipal Bond 1-10 Year Blend (1-12 Year) Index measures the performance of short and intermediate components of the Municipal Bond Index. It is an unmanaged, market value-weighted index which covers the U.S. investment grade, tax-exempt bond market. You cannot invest directly in an index.
[23] The increase in effective tax rates results both from higher state personal income tax rates imposed in both states as well as the cap on the federal deduction for state and local income taxes for high-income taxpayers, which was enacted as part of the 2017 Tax Cuts and Jobs Act. The cap on was recently made permanent, with certain changes, in the One Big Beautiful Bill Act (OBBBA) in 2025.
[24] Plerhoples Stacy, Mehrotra, and Hendy, “States are Stepping in to Address the Housing Affordability Crisis. Is Your State Doing Enough?”, Urban Institute, October 14, 2025. Available at: https://www.urban.org/urban-wire/states-are-stepping-address-housing-affordability-crisis-your-state-doing-enough.
[25] See April 2026 WalletHub study, available at: https://wallethub.com/edu/cities-with-the-most-affordable-rent/147756.
[26] Productivity growth is generally understood to drive real gross domestic product (GDP) growth. Factors that are associated with productivity growth include educational attainment (https://ourworldindata.org/grapher/productivity-vs-educational-attainment) and network effects (Edward Glaeser, “Agglomeration Economics,” The University of Chicago Press, February 2010. Available at: https://www.nber.org/system/files/chapters/c7977/c7977.pdf). For the proposition that “hustle” culture is back, see: https://www.wsj.com/tech/ai/ai-race-tech-workers-schedule-1ea9a116.
[27] Per the Bureau of Economic Analysis, quarterly personal income growth in high tax states tends to grow regardless of the lost adjusted gross income (AGI). IRS wage and salary data show similar trends. The exceptions are years in which recognized capital gains are very high or very low or when tax laws have changed, year-over-year. For example, per IRS data, AGI fell between 2021 and 2022 in California, entirely because of recognition of capital gains, but wage incomes grew over the same period.
[28] Bureau of Labor Statistics data and Breckinridge analysis.
[29] Per Breckinridge analysis of New York State Comptroller’s Monthly Report on Cash Basis of Accounting, for the 12 months through March 2026, Massachusetts’ Department of Revenue May Revenue Collections Report, and California’s
[30]https://www.anthropic.com/economic-index#us-usage.
[31] The S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market-value-weighted index with each stock’s weight in the index proportionate to its market value. You cannot invest directly in an index.
[32] As of June 22, 2026
[33] Note that real private fixed investment in information processing equipment and software reached 44% of all non-residential private fixed investment in Q1-26, per the Bureau of Economic Analysis.
[34] May 13, 2026, Gallup poll. Available at: https://news.gallup.com/poll/709772/americans-oppose-data-centers-area.aspx.
[35] University of Houston, Hobby School of Public Affairs survey, May 2026.
[36] For a useful note on the vagaries of data center depreciation rates and valuation, see: https://www.goldmansachs.com/insights/articles/tracking-trillions-the-assumptions-shaping-scale-of-the-ai-build-out.
[38] Quote from Anthropic’s website: https://www.anthropic.com/glasswing.
[39] See: https://thecyberexpress.com/ransomware-cost-suffolk-county-25-7-million/, https://conduitstreet.mdcounties.org/2019/05/30/baltimore-city-estimates-cost-of-ransomware-attack/, https://the-atlas.com/projects/atlanta-cyberattack.
[42] https://news.gallup.com/poll/700499/new-high-identify-political-independents.aspx
[43] Across 107 special election races in 2025 and 2026, Democratic candidates' margin of victory was, on average, 12.8% greater than the margin in the 2024 presidential election for the same jurisdiction in which the election was held. See publicly available data from The Downballot.com: https://www.the-downballot.com/p/data.
[44] https://centerforpolitics.org/crystalball/2026-senate/
[45] https://thehill.com/homenews/campaign/5863917-nrcc-rnc-fec-2026-midterm-elections/
[47] https://www.reuters.com/world/us/trump-says-he-is-ok-with-republicans-raising-taxes-rich-2025-05-09/
[48] https://thehill.com/homenews/senate/5378256-gop-senators-taxes-hospital-fund/
[49] S2. Secure America Act. https://www.congress.gov/bill/119th-congress/senate-bill/2/text#toc-ide01d67f831914e48a71fc909653206c8
[50] https://www.supremecourt.gov/opinions/25pdf/24-1287_4gcj.pdf
[51] https://www.ppic.org/publication/ppic-statewide-survey-californians-and-their-government-may-2026/.
[52] Jeremy White, “Gavin Newsom’s race to block a billionaire tax,” Politico.com, June 11, 2026. Available at: https://www.politico.com/news/2026/06/11/gavin-newsom-billionaire-tax-00959379?nid=00000150-384f-da43-aff2-bf7fd35a0000&nname=california-playbook&nrid=00000154-c35f-da38-a556-f7df87340001.
[53] https://www.flsenate.gov/Session/Bill/2026F/1F/BillText/er/PDF
[54] https://www.breckinridge.com/insights/2026-municipal-market-outlook
[55] Bond Buyer data, through May 2026.
[56] Per the BBG Municipal Bond 1-10 Year Blend (1-12 Year) Index, June 12, 2026.
[57] Per Refinitiv data, through June 16, 2026.
BCAI-06222026-pxdrly8i (6/25/2026)
DISCLAIMERS:
The content is intended for investment professionals and institutional investors.
This material provides general information and should not be construed as a solicitation or offer of services or products or as legal, tax or investment advice. Nothing contained herein should be considered a guide to security selection, asset allocation or portfolio construction.
All information and opinions are current as of the dates indicated and are subject to change. Breckinridge believes the data provided by unaffiliated third parties to be reliable but investors should conduct their own independent verification prior to use. Some economic and market conditions contained herein have been obtained from published sources and/or prepared by third parties, and in certain cases have not been updated through the date hereof.
There is no assurance that any estimate, target, projection or forward-looking statement (collectively, “estimates”) included in this material will be accurate or prove to be profitable; actual results may differ substantially. Breckinridge estimates are based on Breckinridge’s research, analysis and assumptions. Other events that were not considered in formulating such projections could occur and may significantly affect the outcome, returns or performance.
Not all securities or issuers mentioned represent holdings in client portfolios. Some securities have been provided for illustrative purposes only and should not be construed as investment recommendations. Any illustrative engagement or sustainability analysis examples are intended to demonstrate Breckinridge’s research and investment process.
Yields and other characteristics are metrics that can help investors in valuing a security, portfolio or composite. Yields do not represent performance results but they are one of several components that contribute to the return of a security, portfolio or composite. Yields and other characteristics are presented gross of advisory fees.
All investments involve risk, including loss of principal. No investment or risk management strategy, including diversification, can guarantee positive results or risk elimination in any market. Periods of elevated market volatility can significantly impact the value of securities. Investors should consult with their advisors to understand how these risks may affect their portfolios and to develop a strategy that aligns with their financial goals and risk tolerances.
Active investing generally involves more risks than laddered strategies because active managers may take on greater market risk to outperform their index. There is no guarantee that either passive or active investing will achieve their objectives. Active strategies also tend to have higher management fees and operating costs than passive strategies. Investors should consider all the differences and risks before making any investment decisions. Active management does not guarantee a profit or protect against a loss.
Past performance is not indicative of future results. Breckinridge makes no assurances, warranties or representations that any strategies described herein will meet their investment objectives or incur any profits. Performance results for Breckinridge’s investment strategies include the reinvestment of interest and any other earnings, but do not reflect any brokerage or trading costs a client would have paid. Results may not reflect the impact that any material market or economic factors would have had on the accounts during the time period. Due to differences in client restrictions, objectives, cash flows, and other such factors, individual client account performance may differ substantially from the performance presented.
Actual client advisory fees may differ from the advisory fee used to calculate net performance results. Client returns will be reduced by the advisory fees and any other expenses incurred in the management of their accounts. For example, an advisory fee of 1 percent compounded over a 10-year period would reduce a 10 percent return to a 9 percent annual return. Additional information on fees can be found in Breckinridge’s Form ADV Part 2A.
Index results are shown for illustrative purposes and do not represent the performance of any specific investment. Indices are unmanaged and investors cannot directly invest in them. They do not reflect any management, custody, transaction or other expenses, and generally assume reinvestment of dividends, income and capital gains. Performance of indices may be more or less volatile than any investment strategy.
Fixed income investments have varying degrees of credit risk, interest rate risk, default risk, and prepayment and extension risk. In general, bond prices rise when interest rates fall and vice versa.
Equity investments are volatile and can decline significantly in response to investor reception of the issuer, market, economic, industry, political, regulatory or other conditions.
There is no guarantee that integrating sustainability factors, including those associated with climate risks, will improve risk-adjusted returns, lower portfolio volatility over any specific time period, or outperform the broader market or other strategies that do not utilize sustainability factors when selecting investments. The consideration of sustainability factors may limit investment opportunities available to a portfolio. In addition, sustainability data often lacks standardization, consistency and transparency and for certain companies such data may not be available, complete or accurate.
When considering sustainability factors, Breckinridge's investment team will include those factors that they believe are material. However, the investment team may conclude that other attributes outweigh these considerations when making investment decisions. Breckinridge can change its sustainability analysis methodology at any time.
Breckinridge’s sustainability analysis is based on third party data and Breckinridge analysts’ internal analysis. Analysts will review a variety of sources such as corporate sustainability reports, data subscriptions, and research reports to obtain available metrics for internally developed frameworks. Qualitative information is obtained from company reports, engagement discussion with corporate management teams, among others.
Breckinridge believes the data provided by unaffiliated third parties, including rating agencies, to be reliable but investors should conduct their own independent verification prior to use. Some economic and market conditions contained herein have been obtained from published sources and/or prepared by third parties, and in certain cases have not been updated through the date hereof. All information contained herein is subject to revision. Any third-party websites included in the content has been provided for reference only, and does not necessarily indicate an endorsement.
BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. and its affiliates (collectively “Bloomberg”). Bloomberg does not approve or endorse this material or guarantees the accuracy or completeness of any information herein, or makes any warranty, express or implied, as to the results to be obtained therefrom and, to the maximum extent allowed by law, neither shall have any liability or responsibility for injury or damages arising in connection therewith.
The S&P500 Index (“Index”) and associated data is a product of S&P Dow Jones Indices LLC, its affiliates and/or their licensors and has been licensed for use by Breckinridge. © 2025 S&P Dow Jones Indices LLC, its affiliates and/or their licensors. All rights reserved. Redistribution or reproduction in whole or in part are prohibited without written permission of S&P Dow Jones Indices LLC. For more information on any of S&P Dow Jones Indices LLC’s indices please visit www.spdji.com. S&P® is a registered trademark of Standard & Poor’s Financial Services LLC (“SPFS”) and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). Neither S&P Dow Jones Indices LLC, SPFS, Dow Jones, their affiliates nor their licensors (“S&P DJI”) make any representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and S&P DJI shall have no liability for any errors, omissions, or interruptions of any index or the data included therein.
Subscribe to Insights
Sign up to receive curated insights directly in your inbox.
