Midterm Vote Could Reshape Muni Bonds as $473.8 Billion Supply Meets State Tax Shifts
Updated
Updated · CNBC · Nov 1
Midterm Vote Could Reshape Muni Bonds as $473.8 Billion Supply Meets State Tax Shifts
3 articles · Updated · CNBC · Nov 1
Summary
$473.8 billion of municipal bonds had already been issued through September, and strategists say Tuesday's election could further move the market through state tax measures and new borrowing approvals.
Blue-state tax hikes could lift demand by making tax-exempt income more valuable, while red-state property-tax cuts may pressure some local credits by reducing revenue and forcing offsetting tax increases or other funding sources.
Supply is the biggest near-term risk for returns after issuance rose 7.8% from a year earlier and hit $587.3 billion in 2025, though approved borrowing can still take years to reach the market.
Congress still matters for munis because a new House or Senate majority could pursue affordability and tax policies early next year that affect housing, higher education and public power financing.
24% tax-bracket investors may still find munis attractive, analysts said, with about 70% of the broad index rated AA or AAA and potential opportunities in states weighing higher taxes.