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Virtus Viewpoints:
Municipal Bond Market

The municipal bond market fared well during the third quarter, despite broad-based volatility as a result of geopolitical tensions, the ongoing trade wars, seemingly weaker economic data in the U.S. and abroad, an active Federal Reserve, and now impeachment inquiries heating up. The Bloomberg Barclays Municipal Bond Index posted a return of 1.58% in the quarter, bringing the year-to-date return to 6.75% as municipals continued to benefit from strong demand, manageable supply, and a fairly benign credit environment. The municipal market saw very strong performance through the end of August as yields hit multi-year lows, but began to soften in September as U.S. Treasury yields rose, supply started to build, and investor apathy began to set in. Despite the market turmoil, municipal bonds remain a high quality, tax-advantaged investment that offers attractive yields, especially when taking into consideration the taxable-equivalent yields available.

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The Bloomberg Barclays Municipal Bond Index is a market capitalization-weighted index that measures the long-term tax-exempt bond market. The index is calculated on a total return basis. The index is unmanaged, its returns do not reflect any fees, expenses, or sales charges, and is not available for direct investment.

The commentary is the opinion of the subadviser. This material has been prepared using sources of information generally believed to be reliable; however, its accuracy is not guaranteed. Opinions represented are subject to change and should not be considered investment advice or an offer of securities.

Past performance is not indicative of future results.