How Will the Election Impact Municipal Bonds?

The video discusses the impact of political scenarios on the municipal bond market, focusing on the effects of gridlock, potential economic policies under Clinton and Trump, and the implications of infrastructure spending. It highlights the risks and opportunities in the muni market, including tax exemptions, interest rates, and credit challenges faced by state and local governments.

What is one potential negative impact on the muni market if Trump wins the presidency?

• Increased tax rates

• Lower interest rates

• Higher inflation and steeper yield curve

• Decreased infrastructure spending

How has the muni market been performing over the last 18 months?

• Declining due to high interest rates

• Experiencing high volatility

• Stagnating with no significant changes

• Rallying due to low inflation and growth

What is a major need in the U.S. that could affect the muni market?

• Healthcare reform

• Infrastructure investment

• Increased military spending

• Education funding

What are the two major liability sets for state and local governments?

• Tax cuts and trade deficits

• Deferred capital liabilities and unfunded pension liabilities

• Healthcare costs and education funding

• Military expenses and infrastructure costs

What could alleviate some of the capital pressures in the muni market?

• Lower state taxes

• Increased bond issuance

• Decreased federal involvement

• Reduced infrastructure projects