Belle Haven Investments

In this edition, our Co-CIOs share their perspectives on the latest market developments, what's driving yields, and where we see opportunities ahead.

• What pushed long-term Treasury yields above their 2007 highs, and why the Fed is only part of the story

• Why a hard September for munis created a better entry point

• How we're using the weakness, not hiding from it: buying yield, targeting the curve's sweet spot and putting losses to work

• Quality carry, not beta carry: why high-quality taxable bonds yielding above 5% beat stretching for credit with spreads near decade tights

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Market Insights: The Calm After the Storm, but Uncertainty Remains

• Why municipal yields near multi-year highs opened an attractive entry point
• How the market absorbed record issuance — and where we're getting more selective
• What a flatter curve and a more hawkish Fed under Warsh mean for the rest of the year

Credit Insights: Mid-Year State Credit Round-Up

• Why 45 of 50 states balanced their budgets — but nearly half did it with cuts
• What the largest muni issuers (CA, TX, NY, FL, IL, NJ) reveal about credit quality
• How Medicaid changes and the One Big Beautiful Bill are reshaping state finances

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• Why March's selloff was a rates story, not a credit story
• Where valuations improved and where we're finding opportunity
• Why structure matters more than ever in a volatile rate environment

• The migration narrative is real, but the data says it's overstated
• High-tax vs. no-income-tax states, what the muni return numbers actually show
• The three risks that genuinely matter for credit quality

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Market Insights: Market Volatility Ending on a Positive Note

• 2025 market volatility, yields and relative value
• Duration positioning and curve opportunities

Credit Insights: Expect the Unexpected

• Sector-by-sector municipal credit outlook
• Emphasis on resilience and capital preservation

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Before & After the Cut

Market Insights

• Markets Reprice the Path Forward Amid Fed Uncertainty
• Curve Steepens, Highlighting Value in Intermediate Maturities

Headline Risks and Fundamentals

Credit Insights

• Federal Policy and Munis: What Investors Should Know
• Credit Strength Persists Despite Policy and Market Shifts

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Market Insights: Volatility & Recovery

• Volatility gave way to stability
• Taxable municipal bonds outperformed
• Tax-exempt munis offer compelling value 

Credit Insights

• The One Big Beautiful Medicaid Bill
• Mid-Year State Credit Round-Up

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Market Insights: Tariff Tension

• Policy Uncertainty Drives Volatility: Tariffs and tax reform plans are fueling market disruption and mixed economic signals.
• Conflicting Fed Signals: The Fed held rates steady but lowered growth and raised inflation forecasts, reflecting a complex outlook.
• Sentiment Weakens: Rising recession risks and falling consumer confidence point to growing investor unease.

Credit Insights: Hey Kids, Don’t Try This At Home!

• Munis ≠ Corporates: Unlike corporates, munis are more diverse and slower to change, giving managers time to manage risk.
• Diverse & Stable: Thousands of issuers and gradual credit shifts let skilled managers avoid trouble early.
• Defaults Are Manageable: Major muni defaults are often long-foreseen, showing risk is avoidable with proper oversight.

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Market Insights: Opportunity in Uncertainty: Macroeconomic uncertainty can create opportunities for disciplined investors to generate stable income through quality and diversification.

Credit Insights: 2025 Sector Outlooks and Federal Funding: Specific sector reliance on federal funding and our strategy for the year ahead.

*The contents of this commentary are intended for educational purposes only and are not intended to be relied upon as a forecast, research or investment advice, nor should it be considered a recommendation, offer, or solicitation for the purchase or sale of any security or to adopt a specific investment strategy. All opinions expressed in this commentary are subject to change without notice. Nothing in this commentary should be considered tax or legal advice and investors should contact their tax professional for information regarding their tax situation. Please refer to the Disclosures link below for additional information.

https://www.bellehaven.com/disclosures

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Market Insights - Rate Cuts and Roller Coasters: Navigating the recent rate cut and ongoing market volatility. 

Credit Insights - Decision 2024: Elections and the Muni Market Impact: How will the 2024 election affect the municipal bond market? We uncover the potential impacts. 

While Economic Conditions Remain Resilient, Are We Getting Ahead of Ourselves? Discover why taxable municipal bonds are emerging as a smart, high-quality alternative to corporate bonds.

*The contents of this commentary are intended for educational purposes only and are not intended to be relied upon as a forecast, research or investment advice, nor should it be considered a recommendation, offer, or solicitation for the purchase or sale of any security or to adopt a specific investment strategy. All opinions expressed in this commentary are subject to change without notice. Nothing in this commentary should be considered tax or legal advice and investors should contact their tax professional for information regarding their tax situation. Please refer to the Disclosures link below for additional information.

https://www.bellehaven.com/disclosures

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Thanks for listening to Belle Haven’s Q2 2024 Newsletter. Market and Credit Insights from Belle Haven’s Investment Team.

Market Insights: Interest Rate Debate

• Recent years have been marked by uncertainty and turmoil, a sentiment that continues as we approach the 2024 presidential race.
• Despite the challenges, there is a significant and lasting opportunity in the municipal market. 

Credit Insights: The Forecast for State Credits Calls for Cloudy Skies with a Very Small Chance of Stormy Weather

• With 47 state budgets enacted as of July 3rd, now is an opportune time to view what their financial picture may look like.
• We highlight budget forecasts for some notable states: IL, CA, NY & NJ. 

*The contents of this commentary are intended for educational purposes only and are not intended to be relied upon as a forecast, research or investment advice, nor should it be considered a recommendation, offer, or solicitation for the purchase or sale of any security or to adopt a specific investment strategy. All opinions expressed in this commentary are subject to change without notice. Nothing in this commentary should be considered tax or legal advice and investors should contact their tax professional for information regarding their tax situation. Please refer to the Disclosures link below for additional information.

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