Mid-year muni credit scorecard: where to stay defensive and where risks are rising

Municipal bond credit quality remains in good standing. However, I continue to see emerging weakness across the credit ecosystem. There are various factors that contribute to this observation, but the more obvious ones include a depletion of federal stimulus funds and an organic slide in credit metrics thanks to slower economic growth and lingering inflationary pressures, which have been amplified by trade tariffs and the Iran war. As we approach the conclusion of the first half of 2026, I thought it would be beneficial to craft a mid-year credit scorecard with outlook assignments on our major public finance sectors. The scorecard shows the current risks for each sector with associated risk mitigants, and collectively they form the basis for the outlook.