Municipals Weekly: What will Warsh yield?

Research evidence excerpt

Municipals Weekly: What will Warsh yield?

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Municipals Weekly

What will Warsh yield?

Industry Overview

Key takeaways 15 May 2026

Municipals• Munis can be added at higher yields before a better Fall/Winter; 20/21yr is optimal for

United States total returns on a static curve roll.

• We further focused on OAS dispersion and found several sectors are tails cheap, Table of Contents

including UTL, HLTH, MISC, TBCO, PWR & PC.

Market views and strategies 2• First-time payment defaults totaled $235.1mn in Apr-26, bringing the YTD total to

$492.2mn, down 43% y/y. Performance 4

Supply & demand 6

Waiting for the new Fed Chair CurveRelative value 78

Macro rates remain elevated and may prevail over the summer months. A favorable Trade activity 10

development may come from new ideas of the new Fed Chair, more stable relations with Credit corner 11

major trading partners or progress on reopening the Strait of Hormuz. Muni rates shifted

Defaults, distress & HY 17

up with no change in their flattening bias. Ratios richened at the long end. Credit

Acronyms 18

spreads narrowed some. Investors should use the current environment to acquire bonds

at relatively high yield levels and prepare for a better Fall/Winter. The 20-21yr area on Research Analysts 23

the curve offers optimal spots for total returns on a static curve roll. Investors who tend

to stay inside the 10yr area can focus on the 10yr as it offers the optimal roll. Yingchen Li

Meanwhile, we also provide a heatmap showing at which maturity and which rating Municipal Research Strategist

BofAS

investors with specific yield bogeys could find their desired bonds using the ICE indexes yingchen.li@bofa.com

as a proxy for the muni market broadly. Ian Rogow

Municipal Research Strategist