Municipal bond market reaches record issuance levels as Fed continues rate cuts. Invesco Rochester AMT-Free New York Municipal Fund underperformed its benchmark in Q4 2025, though the investment team maintains constructive outlook on the sector. Municipal issuance surged to record $584 billion for the full year, exceeding 2024's previous record of $509 billion, with Q4 alone reaching $143 billion. The Federal Reserve cut rates by 0.25 percent in both October and December, completing three total cuts in 2025. The fund's strategy emphasizes duration opportunities following municipal yield curve steepening and maintains overweight positioning in revenue bonds relative to general obligation bonds. Pension risks have been generally mitigated in current holdings.
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