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Municipal Bond Investor Weekly High Net Worth Wealth Solutions and Market Strategies from Fixed Income Solutions

Windows of Opportunity: Part 2 The week ahead promises to be interesting with an FOMC meeting grappling with a possible rate hike, the 10-year Treasury touching 5% and continued TED RUDDOCK geo-political uncertainty. The recent move higher in rates provides an even Managing Director, Co-Head wider window of opportunity for investors to lock in yields and long-term Fixed Income Private Wealth tax-efficient cash flow. For investors experiencing some price shock on their existing bonds, remember what doesn’t change: the reliable coupon cash flow and return of principal at maturity / call (see disclosure in comments).

DREW O’NEIL Director Fixed Income Strategy

Yield Curve Comparison MARKET UPDATE 9.00 8.73 Yields pushed higher last week as increased tensions in 8.00 6.63 the Middle East pushed the price of oil higher while 7.00 inflationary pressure now has markets pricing in a ~90% 5.62 chance that the FOMC will raise the Fed Funds rate by 25 6.00 5.35 basis points at this week’s meeting. Treasury yields were 4.96 5.00 higher across the curve by 11 to 26 basis points with the largest move coming at the 2-year maturity. Municipal yields continued their march higher as the benchmark 3.92 AAA curve was up by 19 to 23 basis points. This pushed 3.00 3.32 muni-Treasury ratios higher as well, which now sit at 2.00 ~75% at 10-year and ~92% at 30-years. Over $10 billion in municipal new issuance is expected this week with AA Muni GO AA Muni GO TEY Treasury the largest deal coming from the New Jersey Transportation Trust Fund Authority with a $1.67 billion issue. Illustrative Portfolios (Par Value of $1 Million) 1 to 10 Year 11 to 20 Year 21 to 30 Year The illustrative portfolios demonstrate opportunities Market Value $1,052,835 $991,328 $919,295 across the municipal yield curve. Longer-duration Yield 3.38% 4.51% 5.06% strategies benefit from the steep yield curve, allowing Taxable Equivalent Yield 5.70% 7.62% 8.56% investors to capture additional tax-exempt yield while utilizing call structures that may help mitigate interest rate Duration risk. Average Coupon 4.50% 4.50% 4.50% Annual Cash Flow $45,000 $45,000 $45,000

Sources for Yield Curves and Illustrative Portfolios: Bloomberg LP, Raymond James. For illustrative purposes only. Values and yields are calculated 1 from index-level data and are not intended to representative of actual offerings. Taxable equivalent yield calculations assume a 40.8% tax bracket.

MUNICIPAL BOND INVESTOR WEEKLY

WINDOWS OF OPPORTUNITY: PART 2 Regular readers may recall --- it was barely three months ago --- that I covered this topic as the 10-year Treasury moved past 4.50% for the first time in 2026, bringing municipal rates along for the ride. Opportunities to invest in high grade fixed income at these levels have been limited over the past decade. There was a time --- not very long ago --- when municipal bonds with 4% coupons priced at par ($100) captured investor’s attention after several years of paltry post-COVID rates. Now, as the 10-year Treasury closes in on 5%, we have an even rarer opportunity in muni-land of 5% coupons at par --- and even some at a discount. Granted, these are longer maturity bonds (with 10-year calls), but for clients who understand the muni market, this represents a window of opportunity being opened even wider!! As an example, one marquee credit noted last week was New York City Water Revenue Bonds (Aa1/AA+) 5% coupon maturing in 2051 and callable in 2031, offered at par. Incredible. A 5% tax-exempt yield, for a NY investor in the top federal tax bracket (37%) also subject to the Net Investment Income Tax (3.8%) and not even in the highest NY tax bracket, but the 6.85% bracket (all-in 47.65%), that 5% tax-exempt yield is a taxable equivalent yield of 9.55% --- for a Aa1/AA+ credit --- just one notch below the vaunted Aaa/AAA. That’s reliable, tax-efficient income to help meet your cash flow goals. How long will this opportunity last? That’s anyone’s guess. But if history is any guide, the answer is: not very long. The most recent time the 10-year Treasury reached 5% was…