• Escalation of Trade War: President Trump's Liberation Day announcement introduced new tariffs, shaking the global economic order and U.S. financial markets, increasing recession fears.
• Trade Policy Uncertainty: The Trade Policy Uncertainty Index has risen sharply, reflecting heightened market concerns, with potential impacts from Liberation Day yet to be fully realized.
• Investor Behavior: Investors are adopting a risk-off stance, shifting towards safer assets amid market volatility and macro uncertainty, creating potential opportunities in municipal bonds.
• Municipal Bond Yields: AAA MMD yields surged, reaching a one-day increase not seen since the COVID crisis, presenting attractive investment opportunities despite uncertainty.
• Tax-Exempt Status of Existing Bonds: Despite ongoing policy uncertainty, we believe existing municipal bonds are likely to retain their tax-exempt status, as eliminating it could undermine investor trust and market stability.

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