Some local governments have begun formal assessments about whether electric services to their communities should be municipalized or whether their existing franchise agreements can be updated in their favor.
Most states have already enacted their budgets for the fiscal year as the effects of Medicaid restrictions and tax policy changes in the One Big Beautiful Bill are being analyzed and raising concern.
"Municipal outperformance against taxable sectors has moved short-term ratios on or through their 252-day moving averages, while intermediate and long maturities are holding at or above average ranges," said Kim Olsan, senior fixed income portfolio manager at NewSquare Capital.
Moody's has downwardly revised the outlook for Baltimore's issuer rating and several classes of bonds due to a trend of declining fund balance levels in a city dependent on a major international shipping port.
Michigan's Great Lakes Water Authority went to market in June with roughly a billion dollars of bonds, part of a complex transaction that included a tender.
California local, state and federal officials blasted the Trump administration and congressional GOP for blocking supplemental recovery aid after the wildfires.
Markets are "tilting to a risk-off posture as participants brace for the chance of Trump tariff-sparked turbulence in the coming hours and days," said Jos? Torres, senior economist at Interactive Brokers.
Housing advocates are celebrating the passage of the One Big Beautiful Bill for the boost in Low Income Housing Tax Credits which is projected to boost the use of private activity bonds.
Market participants launched the largest lobbying effort in recent memory to protect municipal bonds and got what they wanted as the tax-exemption survived.
UST yields rose across the curve in response to the employment report with the two-year rising nearly 10 basis points while municipals largely ignored the moves and ratios fell as a result.
"If you are seeking the services of a municipal advisor, it would be helpful to use the term municipal advisor in your RFP/Qs," said Sanchez, director of the SEC's Office of Municipal Securities.
The growth of the muni market comes as issuance surges, with the first half of the year seeing $280.64 billion of supply, up 14.3% year-over-year, according to LSEG.
Yorkville, Illinois, defaulted on special district bonds for Kendall Marketplace, a shopping center that never evolved into the expected retail powerhouse.
"We are entering a period during the summer months in which demand historically outweighs very limited supply, resulting in a supportive performance environment but more limited investment opportunities," said J. Robert Lind of Lind Capital Partners.
Issuance this year has been "relentless" since the start of the year, while historically the "new-issue machine" takes a while to get rolling, said Scott Diamond, co-head of AM Municipal Fixed Income at Goldman Sachs.
Questions over what to disclose in the bond document's risk section has concerned issuers for years, through issues like the pandemic to climate change, and now potential federal funding cuts.
This week has the July 4th holiday, with only $2.5 billion on tap in the primary bond market, though investors have tens of billions in reinvestment cash.
University of Virginia president James Ryan resigned under White House pressure as the Trump administration pushes higher education to comply with its ideology.
Sanchez said the GFOA's debt committee in particular is a place where there could be discussion about what kind of controls are necessary to address the situation.?
Working out the differences between the Senate and House budget bills might result in lawmakers reaching for ways to pay for extending tax cuts and finance new programs which could put tax-exempt munis back on the negotiating table.
In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.
Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.
Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.
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