0
Fund 1
Fund 2
Fund 3
Fund 4
Contact us
Contact Nuveen
Thank You
Thank you for your message. We will contact you shortly.
Listen to this insight
~ 4 minutes long
10
10
Municipal bonds are a foundational element in Nuveen’s proud heritage of investing to support public purpose – and an asset class that touches the everyday lives of all Americans. Munis fund essential facilities and functions such as state and local governments, K-12 schools, colleges and universities, roads and airports, hospitals, water and sewer utilities, housing, and more.
Nuveen’s muni credit analyst team – one of the industry’s largest and longest tenured – constantly assesses the impact of the trends that influence muni credit quality across all market sectors.
Our research identifies what we believe are attractive investment opportunities, and much more. It also yields practical insights into what individuals can expect when it comes to the availability, operation and cost of services used daily – things like the price of an airline ticket or a hospital visit, the health of their regional transportation options, the quality of their local school system, or the dependability of critical utilities.
The Nuveen munis in your community scorecard presents a broad range of such insights and explores the connections with effective muni investment as well as Americans’ lived experience.
We also dive deep into various sectors as we update the scorecard.
Our sector focus: Higher education
- Higher education institutions face unprecedented challenges from demographic shifts, federal scrutiny and infrastructure needs.
- Municipal bonds provide essential financing that enables these institutions to build state-of-the-art facilities, maintain competitive campuses and secure operational liquidity.
- For investors, higher education bonds offer attractive opportunities within the municipal market, particularly as recent market dislocations have created compelling value propositions in a sector with significant long-term capital requirements and societal importance.
Overall sector views
Our broad sector views are below. We look forward to commenting on our insights in future editions as our views evolve.
Nuveen Muni Monitor informs our discussions
| Positive | Neutral | Negative |
| Sector | Factors | Assessment | Sector Momentum | Takeaway |
|---|---|---|---|---|
| State and local governments (cities/counties/school districts) |
State and local tax collections: Total tax revenues up 5.86% in Q1 2025 vs Q1 2024. Governments are budgeting for slower growth ahead. | Credit quality expected to remain stable despite anticipated revenue and economic slowdown. Most states revised revenue projections down for FY26. Balance sheets and liquidity remain strong and reserves are projected to remain stable, though many governments had budget gaps to close and some will use fund balance in the coming year. Nearly half of states have cut expenditures and all will navigate upcoming federal Medicaid changes. Stable property tax collections are positive for most local governments and school districts. |
Neutral | Budget stability should temper tax increases. |
| State rainy day funds: Median reserve balances have grown every year since FY11 and this streak is expected to continue with states projecting a median reserve balance of 13% at end of FY26 up from 8% in FY19. |
||||
| Unemployment: The U.S. unemployment rate was 4.2% in June 2025. |
||||
| Rating changes: Rating upgrades outpaced downgrades by 2.75:1 in Q1 2025. | ||||
| Economy: Real GDP declined by 0.5% in Q1 2025. Pressure from evolving tariff policy expected to constrain economic and tax revenue growth in 2025. | ||||
| Higher education | Enrollment: Fall 2024 enrollment grew 4.5% YOY, with total enrollment now exceeding pre-pandemic levels. Favorably, first year student enrollment increaed 5.5% YOY. | While countercyclicality of enrollment and the presence of endowments have made the sector resilient during past economic downturns, the sector is facing pressure on multiple fronts that may accelerate the gap between haves and have nots. Changes to federal support for universities, in the form of student loans and grants, may impact key revenue streams at the same time international student visa disruptions pressure enrollment. Unlike in past economic cycles, inflationary pressure from tariffs, which reduce disposable income, could outweigh any lift in enrollment from a potential recession. Those universities with the resources and flexibility to withstand the pressure are expected to be resilient during this time while others will struggle. | Negative | School closures and consolidation of smaller regional schools expected to become more common. |
| Demographic trends: National decline in high school graduates projected to accelerate beginning in 2026. | ||||
| State funding: State fiscal stress precipitated by tariffs, waning pandemic aid, and Medicaid cuts could leave less money for higher education. |
||||
| Endowment returns: 16.8% return on S&P for the 12 months ended 6/30/2025 should provide another favorable boost to endowments, following 11.2% average endowment return for FYE 6/30/2024. |
||||
| Federal policy: Changes to DOE and curtailment of federal loans will further heighten affordability concerns. Fewer federal grants threaten a secondary source of revenue to higher education. International student visa disruptions could pressure fall 2025 enrollment at some institutions. |
||||
| Water and sewer utilities | Liquidity: 533 days cash on hand (DCOH) median higher than pre-pandemic. Debt service coverage median rate holding steady. |
Stability expected given the monopolistic nature and rate setting ability of most systems. Strong liquidity exceeding pre-pandemic levels should lead to outperformance over the next credit cycle. Capital investment required for PFAS mitigation and lead pipe removal will require significant capital investment. However, relaxed environmental regulations and enforcement may alleviate near-term cost pressures. | Neutral | Upward pressure on utility rates may impact homeowners. |
| Regulatory framework: New EPA drinking water rules may increase treatment costs. Lead pipe replacement mandates are costly for some geographies. Environmental regulation enforcement and implementation are easing under current administration. Systems have more time to comply, providing temporary capital relief. |
||||
| Housing | Strong demand: Need for more affordable housing in expensive markets supports ongoing construction. |
Housing financing, construction and rehabilitation will continue to benefit from strong political support at both federal and state levels. | Neutral | Strong housing demand supports household balance sheets but high interest rates keep homeowners in place. |
| Increasing supply chain and labor costs: Tariffs anticipated to increase construction material costs. Builders are confident supply chains should hold up in the near-term, though at higher costs. Increased labor costs also expected, with increasing pressure on labor shortages in the trades. | ||||
| Interest rates: Higher rates slow movement as current homeowners are reluctant to give up low cost mortgages. Delayed fed rate cuts keep housing market sluggish. |
||||
| Healthcare | Staffing shortages:Demand for nurses during and right after the pandemic led to a spike in labor costs, leading to steep expense growth. Pace of labor inflation began to subside in 2023, and margins have started to recover. |
Healthcare expenses (labor and supplies) are elevated but beginning to normalize. The main headwind for the industry will be on the revenue side as federal budget changes are implemented over the coming years. | Neutral | Upward healthcare cost trajectory will continue as providers struggle to meet demands of aging population. |
| Material cuts to Medicaid: The newly enacted One Big Beautiful Bill Act will reduce federal Medicaid payments to states. Medicaid is administered (and partially funded) by the individual states so the impact on individual providers is likely to vary widely. Small rural hospitals are considered more vulnerable to funding changes. |
||||
| Demographic trends: Aging population guarantees demand for services will grow. Sector will struggle to serve older, rural populations. |
||||
| Transportation (planes, trains & automobiles) |
Airport strained capacity: Passenger traffic growth expected to be constrained by flat airline capacity and potential geopolitical and macroeconomic risks. |
Airport cash balances remain robust and domestic air travel has recovered back to pre-pandemic levels. Capital investment needed to expand capacity will drive infrastructure borrowing. | Neutral | Air travelers should expect higher ticket prices and airport construction to be the norm. |
| Airport passenger volume: Air travel demand was robust in 2024 and in early 2025, but economic uncertainty is anticipated to slow demand. | ||||
| Toll road traffic and revenue growth normalizes: Traffic demand has returned to pre-pandemic levels, but growing inflation and shifting trade patterns may limit revenue growth. |
Many toll roads annually adjust rates by the consumer price index (CPI), which led to peak revenue growth in the last two years. But a slowing economy in conjunction with higher inflation may lead to a decrease in traffic volume. Higher tariffs and supply chain disruption may result in operating and capital cost increases. | Neutral | Drivers could become more sensitive to toll rate increases later this year and heading into 2026. | |
| New tax revenue for mass transit: Ridership not expected to return to prepandmic levels. New financial support will likely need to come from state and local governments. |
Well functioning public transit systems are essential for urban areas. Facing a fiscal cliff as federal support potentially wanes, systems are seeing increased support and tax subsidies from local and state sponsors. Systems may see stronger oversight from government partners. | Neutral | Fare increases should be less common, but new dedicated taxes will support transit. |
| Positive | Neutral | Negative |
Related articles
Municipal bonds power campus excellence, funding critical higher education infrastructure amid market challenges.
The One Big Beautiful Bill Act and other federal policy changes will significantly impact municipal credit across multiple sectors.
Nuveen’s proprietary ESG scoring methodology evaluates a municipal issuer’s potential contribution to positive ESG outcomes relative to their peers.
Data sources: US Census; NASBO; Fall Fiscal Survey of the States https://www.nasbo.org/reports-data/fiscal-survey-of-states; BLS.gov; national unemployment rate and payroll employment data; Moody's (over 80% of rating changes are in tax-backed sector making this a relevant metric here); https://www.bea.gov/news/2025/gross-domestic-product-1st-quarter-2025-third-estimate-gdp-industry-and-corporate-profits; National Student Clearinghouse Research Center; WICHE – Western Instate Commission for Higher Ed – Knocking on the College Door, 2020; State Higher Education Finance; SHEEO.org; Grapevine Report; https://shef.sheeo.org/grapevine/#about-grapevine; NATIONAL TABLE 1. STATE FISCAL SUPPORT FOR HIGHER EDUCATION, FY 2019-2024; Inside Higher Ed article https://www.insidehighered.com/news/business/financial-health/2023/11/21/universities-see-sluggish-endowment-returns-fy23; Various news articles; Merritt data; US EPA; Transportation Security Administration (www.tsa.gov); Federal Aviation Administration (faa.gov); Federal Transit Administration (transit.dot.gov)
Contact us
Financial professionals
Individual investors
You are on the site for: Financial Professionals and Individual Investors. You can switch to the site for: Institutional Investors or Global Investors
Please be advised, this content is restricted to financial professional access only.
Login or register as a financial professional to gain access to this information.
or
Not registered yet? Register
You are about to access our website for visitors outside of the United States.
You are about to access our website for Nuveen Global Cities REIT
You are leaving the Nuveen website.
You are leaving the Nuveen website and going to the website of the MI 529 Advisor Plan, distributed by Nuveen Securities, LLC.The Nuveen website for institutional investors is available for you.
You are about to access our website for visitors outside of the United States.
You are about to access our website for Nuveen Churchill Private Capital Income Fund (“NC - PCAP”)
