The first half of 2019 was good for municipal bond investors.

The Bloomberg Barclays Municipal bond index registered a 5.09% total year-to-date return through June 30th; credit conditions have generally improved, with upgrades from all three rating agencies exceeding downgrades; and favorable supply and demand dynamics have been supportive of municipal outperformance relative to Treasuries. The 10-year municipal to Treasury ratio, a key measure of municipal bond relative value (AAA tax free yield divided by same maturity Treasury yield), began the year at 87.6%, dropped to a record low point of 71.6% just before Memorial Day (based on Bloomberg data beginning in 2001), and moved higher in recent weeks. Through six months, new issue supply has been flat compared to 2018, which in turn was the lowest in 4 years.

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