Munis Set to Reap Cash as Fed Cuts Rates, AllianceBernstein Says

Municipal bonds are likely to lure money as Federal Reserve interest-rate cuts lead investors to look for new places to park their cash, says Matthew Norton at AllianceBernstein, and he pointed to debt sold for affordable-housing projects as an appealing sector.

The Fed last week lowered rates for a third straight time, and traders expect more cuts in 2026, further reducing returns on the $8 trillion sitting in US money-market funds. Norton expects that munis, and in particular higher-yielding munis, will draw some of that cash.