US Municipal Bonds

UBS maintains a neutral preference for US municipal bonds, favoring the 12-22 year area of the curve as front-end valuations have become rich following a strong January performance.

Key Takeaways

• 1.Muni bonds outperformed Treasuries and IG corporates in January due to the 'January effect', but valuations are now rich.
• 2.The CIO favors the 12-22 year part of the muni curve and remains underweight in the 22-plus-year maturities.
• 3.UBS anticipates two Fed rate cuts in June and September 2026, leading to lower Treasury yields by year-end.

Table of Contents

• Central scenario
• Upside scenario
• Downside scenario
• Global asset class preferences definitions
• Appendix
• Risk information
• Generic investment research – Risk information

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