An active approach to diversified tax-exempt income
Nuveen's forward-thinking approach to portfolio construction leverages 125 years as a leader in the municipal bond industry to help achieve outcomes that align with investors’ tax-exempt income objectives while seeking to minimize downside risk.
Highlights
- In March, the Federal Reserve kept rates unchanged while dot plot projections showed 50 basis point cuts in both 2025 and 2026.Treasury yields moved lower across the curve, with the 2-year and 10-year yields falling by 36 basis points, respectively.
- AAA municipal/US Treasury ratios (“ratios”) rose over the quarter. The 2-, 10- and 30-year rose by 2%, 8% and 12%. The 2-, 10- and 30-year ratios ended the quarter at 68%, 76% and 93%. The 30-year municipal ratio has risen to its highest level since late 2023.
- This quarter’s changes reflect the team’s view of a steepening high yield curve, where short-term maturities appear more attractive than intermediate, alongside elevated municipal ratios and strong high-yield fundamentals. Within high yield, shorter-term credit spreads widened to offer compelling relative value compared to longer-term maturities where strong demand narrowed spreads. In the Conservative model, Nuveen Limited Term Bond was reduced in favor of Nuveen Intermediate Duration and Nuveen Short Duration High Yield Municipal. In the Moderate Model, positions in Nuveen Intermediate Duration Municipal Bond and Nuveen High Yield Municipal bond were trimmed, with increased allocations to Nuveen Limited Term Municipal Bond and Nuveen Short Duration High Yield Municipal. In the High-Income model, Nuveen High Yield Municipal Bond was trimmed in favor of Nuveen Short Duration High Yield Bond and Nuveen Intermediate Duration Municipal Bond.
