UBS On-Air: Market Moves Top of the Morning: Muni Market Guide - A balancing act
Mar 17, 2026
Andrew Dubinsky, Senior U.S. economist at UBS CIO, gives a brisk macro view on growth, labor and inflation. Sudip Mukherjee, senior municipal research strategist, breaks down muni technicals, credit quality and tactical barbell positioning. They discuss attractive tax-equivalent yields, duration opportunities on the long end, elevated supply and the need to balance risk and return.
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Munis Outperform Despite March Technical Weakness
- Municipal bonds have outperformed Treasuries and corporates year-to-date despite a recent sell-off driven by higher Treasury yields and elevated supply.
- Elevated new-issue supply and March/April seasonal weakness weakened technicals, but strong flows and steep curve helped relative performance.
Flows Shift Toward Longer Munis As Curve Steepens
- Investor flows have remained robust and are starting to move toward longer-duration munis as the curve steepens, especially in the 10–30 year area.
- That steepness creates attractive total return potential for multi-year horizons, notably around the 20-year area.
Use A Barbell To Balance Short Term Risks
- Stay tactically defensive in the short term with a barbell in 1–3 and 12–17 year maturities to balance rate and technical risks.
- Focus on risk-adjusted returns rather than just chasing total return amid near-term rate uncertainty.