Valuations High, Yields Higher: Why Munis Deserve a Second Look

Nuveen’s July 2025 CIO Weekly Commentary highlights how elevated equity valuations and shifting tax policy are renewing interest in municipal bonds as a source of income and diversification.

• Equity froth vs. muni value: With U.S. tech stocks trading at ~30x forward earnings, investors may benefit from reallocating into municipals yielding 4–5.7%—at their most attractive levels in a decade.

• Policy impacts uneven: Tariffs, energy incentives, and immigration funding shifts from the new OBBB tax bill create mixed risks and opportunities for municipal issuers.

• Tax advantage preserved: The exemption of muni income survived major reform, reinforcing the asset class’s role in high-net-worth income strategies.

Is your portfolio balancing growth exposure with tax-efficient income? The full commentary breaks down sector-specific risks and yield-driven positioning ideas.