Municipal Bond Snapshot April 2026

Key Takeaways:

• Municipals posted their best April in over a decade despite Treasury weakness, heavy new issuance, and tax-related selling.
• The back half of the curve offers the most attractive value, with nearly 100 bps of yield pick-up between 10- and 20-year bonds – cheap relative to long-term averages.
• Technical factors are likely to be a primary driver in May, historically a strong month driven by heavy reinvestment flows and moderate supply. Elevated issuance could temper otherwise favorable seasonal technicals.

MUNICIPAL BOND MARKET UPDATE

• Treasury yields rose in April amid growing concerns over inflation and a more hawkish tilt at the Fed.
• Municipals posted solid gains, despite a more challenging Treasury backdrop.
• New issuance totaled $48 billion, down 8% year-over-year, but the third-largest April supply figure on record.
• Demand remained strong as March’s sell-off created attractive entry points that drew buyers back into the market.
• The muni curve twist flattened: 2-year yields rose 5bps while 10- and 30-year rates fell 16 bps and 14 bps, respectively.
• Short-end weakness was largely driven by tax-related selling.
• The intermediate part of the curve retraced most of its March steepening but remains in line with its 10-year average.
• 10s/20s finished April at nearly +100 bps, still over one standard deviation cheap to historical averages.
• The 10-year muni/Treasury ratio ended the month at 68%, down from 72% at March’s close.
• Credit spreads were largely stable; energy prepay bond in the Index were the worst performers, widening roughly 10 bps on average.
• Munis enter May with tax-equivalent yields near 5.0% and a stable credit backdrop.