Municipal 4Q21 Market Review & Outlook

January 18, 2022 — The technical environment continues to support yields and spreads as mutual fund inflows totaled approximately $8.0 billion for the quarter and $82.6 billion for the year, which was the second highest on record. Although new issue supply came in at an all-time high of $475.3 billion, almost 30% came as taxable issuance, putting tax-exempt supply at $340.0 billion, which would be average issuance. Fundamentals are solid and continue to improve as the broad market economic recovery has contributed to higher-than-projected income and sales tax receipts. While essential service revenue sectors are dealing with higher input costs, they have been able to pass those costs onto end users. Corporate or quasi-corporate revenue sectors continue to experience a post-Covid recovery environment, which should continue into year-end.