If you can’t remember when municipal bond yields reached current heights, we understand.

It’s been almost 15 years.

The Trump administration’s oscillating tariff pronouncements are spooking financial markets worldwide, and the municipal bond market is no exception.

Amplifying the volatility, selling pressure “has been exaggerated by intra-market dynamics such as tax-payment/syndicate settlement cash raises, as well as some unknown value attached to fear and moves into cash products,” a fixed-income portfolio manager told The Bond Buyer.

The upshot for individual investors?

Yields on 30-year munis recently hit 4.85%, their highest level since 2011, and the 30-year muni-to-Treasury ratio rose above 100% for the first time in more than two years before easing. The yield ratio is normally about 85%.

“There has been a big adjustment in muni yields this year, and the market is attractively priced,” Pimco’s chief municipal portfolio manager told Barron’s.

In other words, for buy-and-hold investors of individual issues, municipal bonds are on sale.

House leaders back exemption

In addition to the disruption, the Trump administration and Congress are looking for ways to pay for trillions of dollars in tax cuts – and the tax exemption on interest earned from municipal bonds is in their crosshairs (“Amid Exemption Debate, Muni Investors Keep Reaping”).

As expected, a raft of state and local elected officials is working to maintain the exemption, which is key to municipal bonds’ ability to finance water systems, schools, roads and other critical public infrastructure.

Bolstering their efforts, a group of key Congressional leaders recently added their support to maintaining the exemption.

“Tax-exempt municipal bonds have a proven track record of responsible, community-driven investment,” Rep. French Hill (R-AK), chairman of the House Financial Services Committee, said in a letter to the House Ways and Means Committee.

“They are a fiscally sound tool that enables state and local governments to meet the growing needs of their communities without increasing federal spending or burdening local taxpayers. Therefore, we urge your support in preserving the federal tax-exemption for municipal bonds.” others are joining the effort, too,” the letter stated.

Co-signing the letter was the vice chairman of the Financial Services Committee and the chairs of five other subcommittees.

Fundamentals ‘in good shape’

Meantime, amid the political and market tumult, analysts say issuers’ credit looks favorable.

“Fundamentals for most municipalities are still in good shape,” according to LPL’s chief fixed-income strategist. “Once the volatility subsides, we would expect muni yields to fall, although uncertainty could keep yields relatively higher. In other words, so far, we think this is a volatility event and not a credit event.”

We are not clairvoyant, so we won’t hazard a guess on where tariffs might go. At the same time, it’s impossible to know what Congress and the administration will decide on the muni tax exemption.

Having spent decades in the municipal bond industry, however, we can say that tax-free bonds continue to perform as they were intended: Providing peace of mind that many other securities don’t.

Buy-and-hold investors ignore fluctuating market prices. They are paid a pre-determined amount at regular intervals for a stated period of time. When they have the funds and unusual opportunities arise in the market, they happily take advantage of them.

That’s how they sleep well at night.