A Rally for the Record Books

Municipal Market Update | December 2023

The municipal bond market followed November’s record rally with another month of lower yields. After several months of rising yields leading into November, the tax-exempt muni market saw the last two months of the year go lower by more than over 100 basis points (bps) across the curve. This two-month move is one of the largest rallies the municipal market history.

Major Municipal Bond Index Returns (%)

Municipal & Tax Equivalent Yields

Yields across the curve experienced a substantial downward move, however, value persists on the front end and past 10 year calls.

The ongoing yield curve inversion from 3 to 10 years suggests a barbell strategy centered around 1 to 2 year and 12+ year maturities is increasingly appealing.

Municipal/Treasury Ratios

The wider spreads between the below data points indicates a steeper municipal curve compared to Treasuries.

A & AA Revenue Credit Spreads

Credit spreads remain wider than we have seen in years, but we expect spreads to face downward pressure once the credit market regains traction. Early indications suggest the market is already showing a pattern of compressing spreads.

Learn more about SBH’s Municipal Strategies.

Source: All data from Bloomberg as of 12/31/23.


A basis point is a standard measure for interest rates and other percentages in finance. This update provides an overview of certain broad-based Fixed Income benchmarks and does not include performance of the Segall Bryant & Hamill Fixed Income styles. Past performance cannot guarantee future results. All investments involve risk, including the possible loss of capital. All opinions expressed in this material are solely the opinions of Segall Bryant & Hamill. You should not treat any opinion expressed as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of the manager’s opinions. The opinions expressed are based upon information the manager considers reliable, but completeness or accuracy is not warranted, and it should not be relied upon as such. Market conditions are subject to change at any time, and no forecast can be guaranteed. Any and all information perceived from this material does not constitute financial, legal, tax or other professional advice and is not intended as a substitute for consultation with a qualified professional. The manager’s statements and opinions are subject to change without notice, and Segall Bryant & Hamill is not under any obligation to update or correct any information provided in this material.

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