Insights

Breckinridge believes a less rigid approach to municipal bond management can pursue objectives similar to ladder strategies while providing flexibility to opportunistically take advantage of changing market conditions.

As a city’s population increases, a municipality’s credit profile can change rapidly. Population growth is typically a favorable credit factor but can introduce challenges as well.

As yields rise or fall, the pace and size of any change in one bond’s prices can be different than another bond.

The municipal bond market enters 2025 with strong but ebbing credit fundamentals, the potential for rising Municipal/Treasury ratios driven by increased issuance and weaker demand due to policy uncertainty, and tight credit spreads.

Demographic shifts, more competition in the public school arena, and state aid formulas are driving challenges.

High quality investment grade (IG) bonds have traditionally played an important role in well-diversified portfolios of investors seeking stable income, diversification, and capital preservation.

This perspective explores this market disconnect and highlights trends that suggest a change may be in the offing.

Traditionally, investors have allocated to high-quality investment grade bonds with a goal of earning predictable income, diversifying their overall portfolio risk, and preserving capital.