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2021 Muni Outlook

2021 Muni Outlook

The Covid-19 pandemic made 2020 a year like no other. But the municipal bond market largely weathered the storm. In 2021, we think another supply surge and the potential for policy changes may create volatility —and opportunity—for selective investors, including in municipal credit.

We see three themes with the potential to drive performance

Supply Surge: Use It to Your Advantage

Investors may get the chance to maximize after-tax yields

Status Quo or No?
Eye on Fiscal Policy

New administration. New priorities.
New policies?

Taking Credit in 2021

Selective exposure to credit may yield opportunities


Key Considerations

"If Treasury yields remain at low levels, we will likely see taxable munis comprise a large portion of total municipal supply again in 2021. We believe this allows for compelling relative value opportunities for disciplined and active investors."

Scott Diamond | Co-Head GSAM Municipal Fixed Income

"Policy changes could lead to increased interest rate volatility in 2021. Investors are encouraged to evaluate duration risk within portfolios. This may mean considering a flexible, actively managed approach that is ready to take advantage of opportunities across the yield curve."

Sylvia Yeh | Co-Head GSAM Municipal Fixed Income

"Strong revenue growth prior to the pandemic helped municipalities persevere through the difficult April-June period. If the US economy continues to return to normal trends, municipal credit should broadly benefit."

David Alter | Head of GSAM Municipal Research

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2021 Muni Outlook

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