Summer Seasonal Technicals in Municipal Bonds: A Reliable Tailwind?

Municipal bonds often see a seasonal lift during the summer months. This pattern, known as summer technicals, stems from a straightforward supply and demand imbalance that tends to favor bond prices. Over the past ten years, the summer months (May through July) have generally been positive months for the Bloomberg Municipal Bond Index, with monthly returns averaging +0.83%, +0.43%, and +0.82%, respectively.