If Taxes Go Higher, Demand for Municipals Will Also Rise

  • States such as New Jersey, California, and New York have been considering taxes on the wealthy to help close budget gaps.

  • Demand for municipal bonds has been strong since the Tax Cuts and Jobs Act of 2017, and that demand has continued in recent months. This week, investors added another $2.3 billion to municipal mutual funds. This was the 14th consecutive week of positive flows where investors have in total allocated $21.4 billion into municipal funds.

  • We expect demand for tax-exempt municipal bonds will rise if or when taxes go higher.

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