Investortools’ newly released 2024 Year in Review Municipal Bond Market Performance Report paints a dynamic year for municipal bonds. Despite a series of ups and downs, the municipal bond space ultimately closed the year on a positive note.
Key Takeaways from the 2024 Performance Report
- Shifts in the Yield Curve: Throughout 2024, the yield curve saw marked fluctuations. The largest yield increases, causing the biggest drag on performance, happened in mid-range maturities. In contrast, the shortest-term maturities posted much smaller yield hikes, causing less performance drag.
- Ongoing Tightening of Credit Spreads: For lower-rated bonds, credit spreads continued to tighten—a multi-year trend continuing to boost the returns of those securities. This development underscores growing confidence in higher-yielding municipal issuers and illustrates ongoing risk appetite.
- Income Remains a Bright Spot: While yield curve moves and credit conditions played crucial roles, the core strength of municipal bond income provided a buoyant effect, helping keep overall returns in the green for 2024.
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