Municipal Summary
Municipals stood still yesterday as Treasury yields quietly moved lower off several key technical levels (i.e., notably the 30yr closing back through 5.0%). Tax-exempt volumes were better (~10% above recent averages), ETF NAV intraday movement was rangebound and fundamental headlines held mostly steady. So the municipal market was able to focus on the pricing and distribution of a heavier primary calendar yesterday, which was reportedly well received despite some higher bids-wanted par.
Municipal Returns
IG Maturities (%): The 3-month window shows 5–10yr paper negative (10yr at -1.13%) while 20yr+ is up over +1.00%, showing some duration extension over the period. On a trailing year, the 15yr bucket leads at +7.89%, nearly double the 1yr at +3.25%.
HY Maturities (%): Returns are positive across most of the curve over 3- and 6-month windows, but the 3yr bucket's -3.94% trailing 1-year return is a notable outlier. The 15yr bucket leads on almost every horizon, posting +2.60% YTD and +7.98% over the past year.
IG Credit (%): The week was uniformly negative across all sectors, but the 1-month and 6-month windows remain solidly positive — Hospitals continues to lead on both at +1.12% and +1.70%, respectively. The 3-month picture is more mixed, with Education (-0.37%) and Electric (-0.30%) dragging while Hospitals and Housing are the only sectors holding above zero.
HY Credit (%): Dispersion in HY is large — Hospitals (+2.98% YTD, +8.10% 1yr) and W&S (+8.75% 1yr) are outpacing the broad index, while Transportation (-4.79% 1yr) and Tobacco (-3.49% 1yr) remain red on a trailing basis. Transportation was the only sector to post a positive 1-week return (+0.56%), a bounce after months of underperformance.
Credit Market Returns
Credit Returns (%): EM credit is the clear winner across horizons — EM HY leads at +14.65% on the year and EM Gov at +12.74%. Treasuries (IEF) remain the laggard with the only negative YTD return (-0.39%), as spread product continues to outperform.
Model Returns
MUNISTREET developed a trading model in 2026 which shows strong alpha and tail-risk properties. It is a long/short strategy using municipal technical signals to toggle positioning between long and short MUB. The model has generated ~7.0% annualized vs. ~2.0% for MUB since 2016, 1.16x Sharpe ratio, no negative calendar years, and average annual max drawdowns under 3%. Trades are roughly evenly split between long and short days with alpha in both rising and falling rate environments.
The model returned +0.62% over the past week versus -0.62% for the market, generating +1.24% of alpha as positioning captured the recent selloff. Over the last month, the model is up +1.57% against +0.38% for MUB, with the bulk outperformance coming from the late-April shift in positioning that preceded a period of sustained market weakness. YTD the model has returned +3.98% versus +0.27% for MUB — on pace with its historical annualized return of ~7.23% and well within its typical drawdown envelope of under 3%.
Below is a longer term look at the model’s returns and characteristics:
MUNISTREET Model
MUNISTREET Model
MUNISTREET Model
MUNISTREET Model
Macro/Rate Summary
Factory orders beat consensus by a full percentage point in March; ex-transportation orders posted another strong gain; core capital goods orders rose.
US economic surprise index rising, driven by better-than-expected hard data.
Senior Loan Officer survey: banks tightened standards for corporate loans; commercial real estate and household lending standards roughly unchanged.
Real personal income per capita has not grown in 15 months and is meaningfully below the pre-pandemic trend.
Median list home prices -1.4% YoY (6th straight annual decline); homeownership falling across all age cohorts.
Apartment List rents fell for the 13th consecutive month; multifamily vacancy ticked down to 7.2% — first decline since 2021.
Economist's predictive inflation measure has risen.
US 30Y Treasury yield at highest level since May 2025.
Paradigm Capital: bull steepener trade under pressure; sustained move below 40bps in 2s10s would confirm a trend shift.
Canada 10Y yield jumped to highest since May 2024.
Last month was the first since August 2023 with more global rate hikes than cuts; JPM hawk-dove scores tilted hawkish across major central banks.
Consensus 2026 global GDP growth estimates broadly ticked down since the Iran conflict began.
61% of S&P 500 companies have beaten EPS estimates by more than one standard deviation (vs. 49% historical average); only 5% have missed — smallest share in 25+ years (ex-2021 reopening); average reward for beats has been particularly small.
2026 EPS upward revision remains unprecedented vs. typical seasonal trend; revision breadth reaccelerated since reporting season started (MS).
US dividend yield at record lows.
Eurozone manufacturing PMI accelerated in April, distorted by stockpiling on supply concerns; expansion broad-based across Germany, France, Italy, Spain (back to expansion), Netherlands.
Bitcoin at highest level since January 2026; crypto funds saw 4th consecutive week of inflows.
Tripp Kaiser is the founder of munistreet, is the executive director of the center on municipal capital markets and is a professor of practice at the LBJ School of Public Affairs at the University of Texas at Austin.