24/7 Wall Street
28 May 2026, 08:48 UTC · 1h ago
Source · https://247wallst.com/investing/2026/05/28/the-muni-bond-myth-that-cost-high-earners-millions/
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High-income investors are shifting allocations from municipal bonds to U.S. Treasuries in taxable accounts due to narrowing after-tax yield advantages. — A systemic shift away from municipal bonds by high-net-worth investors could create downward pressure on muni bond prices and increase borrowing costs for municipalities.
-0.40The 10-year U.S. Treasury yield is currently 4.56%, sitting near its 52-week high. — High Treasury yields make risk-free assets more attractive, potentially drawing capital away from riskier assets but offering a strong entry point for fixed-income investors.
+0.30The 2020 pandemic demonstrated that municipal bonds carry significant credit risk, specifically citing a 96% revenue decline for the New York MTA. — This highlights a fundamental shift in risk perception for the muni market, potentially leading to a permanent increase in the required credit risk premium.
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