Municipal Market Update | January 2026
The municipal market saw significant positive returns compared to other fixed income classes in the month of January. The January Effect was in full effect for the month, with investors selling in December to realize tax losses and cash flooding back in January, as well as coupon and principal payments hitting during the month.
January 2026 saw the 2nd highest level of issuance for the month, only following January 2025. 2026 issuance projections are expected to exceed the record supply of 2025.
Major Bond Index Returns (%)
| Duration (years) | Yield | Tax Adjusted Yield (40.8% Tax Rate) | QTD Return | YTD Return | |
|---|---|---|---|---|---|
| Short | |||||
| Bloomberg Municipal Bond 1 Year Index | 1.27 | 2.43 | 4.10 | 0.56 | 0.56 |
| Bloomberg US Treasury 1-3 Year Index | 1.81 | 3.55 | 0.19 | 0.19 | |
| Intermediate | |||||
| Bloomberg US Treasury Intermediate Index | 3.51 | 3.73 | 0.01 | 0.01 | |
| Bloomberg Municipal Bond 5 Year Index | 3.63 | 2.64 | 4.45 | 0.98 | 0.98 |
| Bloomberg US Intermediate Corporate Index | 3.99 | 4.45 | 7.52 | 0.22 | 0.22 |
| Long | |||||
| Bloomberg 1-15 Year Municipal Index | 4.81 | 2.95 | 4.99 | 1.06 | 1.06 |
| Bloomberg US Agg Index | 5.87 | 4.36 | 0.11 | 0.11 | |
| Bloomberg US Municipal Index | 6.77 | 3.45 | 5.83 | 0.94 | 0.94 |
Municipal Yields (%)
January started the year with a fairly large curve steepening move. Front-end municipals saw significant decreases in yield, while the long-end saw slight moves higher in yield.
Year-to-Date
SBH Municipal Fixed Income Platform
Source: All data from Bloomberg as of 1/30/26.
A basis point is a standard measure for interest rates and other percentages in finance. This update provides an overview of certain broad-based Fixed Income benchmarks and does not include performance of the Segall Bryant & Hamill LLC (dba CI Segall Bryant & Hamill Asset Management) Fixed Income styles. Past performance cannot guarantee future results. All investments involve risk, including the possible loss of capital. An investor cannot invest directly in an index. Indexes are unmanaged and do not incur fees and expenses. All opinions expressed in this material are solely the opinions of Segall Bryant & Hamill. You should not treat any opinion expressed as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of the manager’s opinions. The opinions expressed are based upon information the manager considers reliable, but completeness or accuracy is not warranted, and it should not be relied upon as such. Market conditions are subject to change at any time, and no forecast can be guaranteed. Any and all information perceived from this material does not constitute financial, legal, tax or other professional advice and is not intended as a substitute for consultation with a qualified professional. The manager’s statements and opinions are subject to change without notice, and Segall Bryant & Hamill is not under any obligation to update or correct any information provided in this material.
The Bloomberg 1 Year (1-2) Municipal Bond Index measures the performance of municipal bonds with time to maturity of more than one year and less than two years. The Bloomberg 5 Year (4-6) Municipal Bond Index measures the performance of municipal bonds with time to maturity of more than four year and less than six years. The Bloomberg U.S. 1-15 Year Municipal Bond Index measures the performance of USD-denominated long-term, tax-exempt bond market with maturities of 1-15 years. The Bloomberg US Treasury 1-3 Year Index measure US dollar-denominated, fixed-rate, nominal debt issued by the US Treasury with 1-2.999 years to maturity. The Bloomberg US Municipal Index measures USD-denominated long-term tax-exempt bond market. The Bloomberg US Treasury Intermediate Index measures US dollar-denominated, fixed-rate, nominal debt issued by the US Treasury with maturities 1-9.9999 years to maturity. The Bloomberg US Intermediate Corporate Bond Index measure the investment grade, fixed-rate, taxable corporate bond market whose maturities range between 1 to 9.9999 years. The Bloomberg Taxable U.S. Aggregate Bond Index is a broad-based fixed-income index used by bond traders. An investor cannot invest directly in an index. Indexes are unmanaged and do not incur fees and expenses. Yield to Worst is the lowest potential bond yield received without the issuer defaulting; it assumes the worst-case scenario, or earliest redemption possible under terms of the bond. Duration is a calculation of the average life of a bond (or portfolio of bonds) that is a useful measure of the bond's price sensitivity to interest rate changes. The higher the duration number, the greater the risk and reward potential of the bond.
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