CONCLUSION
Among municipal bonds, low yields offset fair valuations and, along with a change in seasonal factors, send mixed messages to municipal bond investors. On a longer-term basis, however, valuations remain attractive and the favorable supply-demand balance is expected to remain in place as debt issuance capacity remains restrained. Investors should keep return expectations in check, but we continue to find municipal bonds one of the more attractive high-quality bond sectors in what seems likely to remain a low-return world.
Anthony Valeri is fixed income and investment strategist at LPL Financial.