Investing municipal bonds recent trends show that investing

Recent trends show that investing municipal bonds is drawing attention from risk-averse investors, as yields on benchmark AAA-rated 10-year munis hover around 2.85%, tracking Treasury fluctuations. Analysts forecast moderate price appreciation in Q3 if the Fed signals a pause in rate hikes. In 2025 alone, Vanguard has launched four new actively-managed bond ETFs, adding to its menu of 66 active bond funds. Its active fixed-income assets amount to $1.1 trillion of the firm’s $11 trillion in assets—though a large portion of that sum includes low-risk money-market funds that are considered actively managed—second only to BlackRock’s $1.2 trillion in this category. Its nine active bond ETFs, which have all launched since 2021, hold more than $10 billion in assets. In high-tax states like California and New York, tax-equivalent yields on long-term munis can rival stock market returns, yet with far less volatility. Investing municipal bonds are benefiting from credit upgrades, with Fitch raising ratings on multiple water utility issuers. This reinforces defensive portfolio positioning in anticipation of potential economic slowdown.