Podcast: When Markets Dull, Do Munis Shine?

Nick Venditti: Hi, I'm Nick Venditti, head of the municipal bond desk here at Allspring Global Investments. Welcome to SpringTalk. Today, I want to talk to you a little bit about volatility. It turns out there's been quite a bit of it—even in the fixed income markets—over the last couple of weeks. It feels sort of like I've lived three entire investment careers within the span of about two weeks. And while that is terrifying and unsettling, it also probably presents some pretty incredible opportunities for you as an investor. But let's start with what caused the volatility, especially in the fixed income markets. There's been a lot of conversation around foreign buyers of Treasuries. There's been a lot of conversation around the strength of the dollar. There's been a lot of conversation around just the plumbing of the fixed income markets within the United States—all of which played some role in creating the volatility. The good news, though, is that most of that noise is behind us. We've laid off some of the more aggressive political rhetoric as it relates to tariffs—almost certainly more to come there. We've certainly laid off the aggressive rhetoric as it relates to perhaps replacing the chairman of the Federal Reserve. And we've laid off some of the rhetoric around some of the other, I think, damaging macroeconomic talk that was out there. The good news for investors is that now the bond markets are operating the way they should. That doesn't mean that volatility is done. It doesn't mean that we won't see some significant volatility in the future, but it does mean that the markets are operating normally. From a municipal bond buyer perspective, I think that provides really, really interesting opportunities for investors. This is perhaps an attractive entry point. It's maybe an attractive entry point because, for the first time in a long time, not only are yields elevated but muni-to-Treasury ratios are as high as they've been since 2008. And at any point in any time in the past when you got both high yields and attractive muni-to-Treasury ratios, it proved to be a great period of time for municipal bond investors. So, look, it's going to continue to be a difficult market to navigate, but fixed income looks attractive. Municipal bonds look attractive. Don't let volatility scare you away from opportunity.

Thank you so much. Have a great day!