Top earners have traditionally been attracted to municipal bonds for their tax-exempt status at the federal and often state and local levels.
In the wake of President Donald Trump’s stunning upset victory, however, muni investors were forced to readjust their expectations of fiscal policy going forward. Because Trump had campaigned on deep cuts to corporate and personal income taxes, equities soared while munis sold off, ending a near-record 54 weeks of net inflows.
This appears to have been premature, for a couple of reasons.