Highlights

  • Loomis Sayles expects markets could experience an uptick in policy-related volatility.
  • Municipal market participants skeptically await critical components of the bipartisan infrastructure plan and reconciliation package, as direct subsidy Build American Bonds (BABs) and restoration of tax-exempt advance refunding could expand municipal issuance and offer supply relief.
  • Although Covid-19 variants pose a threat to straight line recovery in sectors like airports and toll roads, recovery-related trends point to improvement as companies want to see clients in person and metro areas continue to return to the office.
  • Fundamentals of state and local issuers appear solid, with considerable aid by American Rescue Plan funding.
  • Against a backdrop of continuing, though somewhat slowed economic expansion due to supply chain disruptions, the team’s outlook trends toward moderately higher interest rates and a somewhat steeper yield curve.
Municipal Securities Risk: Municipal markets may be volatile and can be significantly affected by adverse tax, legislative or political changes and the financial condition of the issuers of municipal securities. The views and opinions expressed may change based on market and other conditions.

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