Potential tax changes highlight municipal market opportunities

As tax policy discussions gain momentum, the long-standing tax-exempt status of municipal bonds is up for review. And a potential increase in the top marginal tax rate is on the table. While this introduces a degree of uncertainty, it also creates potential opportunities for investors. Shifts in policy expectations have led to market dislocations, offering attractive entry points for those positioned to navigate the evolving landscape with a focus on credit quality and valuation.

While Nuveen remains confident that there will be little to no change to the tax-exemption for municipal bonds, high levels of uncertainty in the current environment mean investors should plan for all scenarios.

Given elevated yield levels, resilient credit fundamentals and our expectation that municipals will retain their tax-exempt status, we believe this is a compelling opportunity to invest in the asset class and capitalize on the current market dislocation.