Municipal bonds are currently exhibiting stronger performance compared to U.S. Treasury bonds. This trend is primarily attributed to robust demand coupled with a constrained supply within the municipal market.

Several factors are contributing to this dynamic:

• Tax Reform: The recent tax reform legislation has increased the attractiveness of municipal bonds due to their tax-exempt status. Investors are seeking tax-advantaged investment options, boosting demand for municipals.
• Limited Supply: The issuance of new municipal bonds has been relatively low, further supporting prices.
• Strong Demand: Institutional and retail investors are showing strong interest in municipal bonds, driven by their stability and tax benefits.

This outperformance is expected to continue in the near term, given the current market conditions and the ongoing impact of tax reform.