An active approach to diversified tax-exempt income
Nuveen's forward-thinking approach to portfolio construction leverages 125 years as a leader in the municipal bond industry to help achieve outcomes that align with investors’ tax-exempt income objectives while seeking to minimize downside risk.
Highlights
- In March, the Fed left the federal funds rate unchanged. In its projections, the Fed forecasted 25 basis points of cuts in 2026 and 2027. The Fed also provided an update to its economic projections, including inflation (Core PCE), forecasting its preferred measure of inflation to end 2026 at 2.7%. Additionally, the Fed left its year-end unemployment forecast unchanged at 4.4%.
- In Q1 2026, municipal-to-Treasury ratios rose. The 5, 10 and 30-year ratios rose by 2%, 6% and 5%. Ratios ended the quarter at 66%, 71% and 92%, respectively. High yield municipal spreads declined by seventeen basis points during the quarter.
- These market dynamics informed the quarterly adjustments to our models. In the Conservative model, a small reallocation was made from Nuveen Intermediate Duration Municipal Bond to Nuveen Limited Term Municipal Bond. In the Moderate model, Nuveen High Yield Municipal Bond exposure was reduced and reallocated to Nuveen Limited Term Municipal Bond and Nuveen Short Duration High Yield Municipal Bond. In the High-Income model, Nuveen High Yield Municipal and Nuveen Intermediate Duration Municipal Bond allocations were trimmed while increasing Nuveen Short Duration High Yield Municipal Bond and Nuveen All-American Municipal Bond Fund positions. Overall, the changes made were duration-neutral across the models.
