Eaton Vance — Q1 2026 Earnings Presentation
40 slides from Eaton Vance's earnings presentation, Mar 31, 2026
Slide 1: Municipal Bond Market Monitor
Municipal Bond Market Monitor Municipal Bond Investment Team March 31, 2026
Slide 2: Macro Outlook
Vance }> Parametric Macro Outlook
Slide 3: Yields remain elevated compared to history
Yields remain elevated compared to history Bloomberg 10-Year US Treasury Bond Index Yield-to-Worst 6.00 5.00 4.00 Yield (%) 3.00 2.00 1.00 0.00 Source: Bloomberg as of 3/31/26. Data is for informational use only. Past performance is not a reliable indicator of future results. The index performance i
Slide 4: Job growth has slowed as unemployment rises
Job growth has slowed as unemployment rises Monthly Payrolls and Unemployment Rate (%) 300 5.00 250 228 237 218 206 Monthly Payroll Change (Thousands) 200 175 4.50 156 159 154 155 150 134 Unemployment Rate (%) 127 126 108 100 78 87 76 4.00 64 67 64 53 50 33 42 41 9 13 0 3.50 -20 -17 -50 -48 -70 -100
Slide 5: Inflation readings have steadied, but still above the Fed's target
Inflation readings have steadied, but still above the Fed’s target Consumer Price Index (CPI) and Core CPI (%) 10.00 9.00 US CPI 8.00 US Core CPI 7.00 Percent (%) 6.00 5.00 4.00 3.00 2.00 1.00 0.00 Source: Bloomberg as of 2/28/2026. Data provided is for informational use only. Past performance is no
Slide 6: After a negative print in Q1 2025, GDP bounced back in Q2 and Q3, and slowed in Q4
After a negative print in Q1 2025, GDP bounced back in Q2 and Q3, and slowed in Q4 GDP US Chained Dollars (Quarter over Quarter) 10.00 8.00 7.0 6.2 6.00 5.2 4.6 4.6 4.7 4.4 4.2 3.6 3.3 3.8 4.00 3.3 3.2 3.3 3.4 3.3 3.4 2.5 2.6 2.7 2.8 2.9 2.5 GDP (%) 2.3 2.4 2.4 2.2 1.8 2.0 2.3 2.1 2.2 1.9 2.00 1.3 1
Slide 7: Markets expect slower rate cuts than the Fed is signaling
Markets expect slower rate cuts than the Fed is signaling US Federal Reserve - Central Bank Policy Rate Upper Bound PLUS Futures-implied and FOMC Expectations U.S. Federal Reserve Upper Bound FOMC Dot Plot (Year End) Fed Funds Futures 8% 7% 6% Yield (%) 5% 4% 3.47% by July ‘27 3% Long Run 3.13% 2% 1
Slide 8: As overnight rates decline, money market fund assets may seek a new home
As overnight rates decline, money market fund assets may seek a new home ICI Money Market Funds Total Net Assets 8500 8000 7500 7000 Billions ($) 6500 6000 5500 5000 4500 4000 2020 2021 2022 2023 2024 2025 Source: Bloomberg as of 3/31/2026. Data provided is for informational use only. Past performan
Slide 9: Equity Risk Premium - Bonds look more attractive as stocks appear overvalued
Equity Risk Premium - Bonds look more attractive as stocks appear overvalued Equity Risk Premium 1,000 800 Higher: Stocks undervalued relative to Bonds 600 Basis Points 400 Average 200 0 Lower: Stocks overvalued relative to Bonds -200 -400 Source: Bloomberg as of 3/31/26. Data provided is for inform
Slide 10: Municipal Market Update
= EatonVance )> Parametric Municipal Market Update
Slide 11: March Municipal Market Review
March Municipal Market Review MUNICIPAL GAINS ACCRUED IN JANUARY AND FEBRUARY ERASED BY MARCH SELL-OFF MARCH 2026 RETURNS: • Muni Bond Index: -2.3% | HY Muni Index: -1.9% | Taxable Muni Index: -2.1% • US Treasury: -1.7% | Corporate: -2.0% MUNICIPAL YIELDS JUMPED DURING THE MONTH LEAVING YIELDS HIGHE
Slide 12: Heavy March issuance brought Q1 supply to $127bn, up 6% year-over-year
Heavy March issuance ($50bn) brought Q1 supply to $127bn, up 6% year-over-year. Municipal Bond Issuance 600,000 580,000 514,000 500,000 470,455 463,690 428,005 409,945 411,112 400,000 360,985 365,210 Millions ($) 318,028 300,000 200,000 127,000 100,000 0 2016 2017 2018 2019 2020 2021 2022 2023 2024
Slide 13: Top State issuance and year over year change (%)
Top 15 State issuance and year over year change (%) Municipal Bond Issuance $3.7bn -10% $3.3bn $14.5bn +111% +1% $2.8bn -22% $6.5bn $5.4bn $2.9bn +53% +83% -34% $19bn $2.5bn -1% $3.9bn +13% $2.8bn +911% +80% $4.8bn $16bn +18% +27% $5.7bn +18% Source: Bloomberg as of 3/31/26 Municipal Bond Market Mon
Slide 14: Q1 flows were strong with investment grade funds leading the way
Q1 flows were strong with investment grade funds leading the way Muni Fund Flows By Category YTD Municipal Fund Flows ($Bn) 30.0 26 25.0 22.6 20.0 14.8 15.0 14.3 11.2 10.0 8.1 5.0 3.4 2.3 1.3 0.0 All Term Muni Open-End Fund ETF Investment High Long Term Intermediate Short/ Short Grade Yield Intermed
Slide 15: A weak March resulted in slightly positive to slightly negative returns across the curve
A weak March resulted in slightly positive to slightly negative returns across the curve in Q1 Bloomberg Municipal Bond Index Returns 2025 and YTD 8.0% 7.0% 5.92% 6.0% 5.70% 5.31% 5.03% 5.0% 4.11% 4.0% 3.47% 3.12% 3.0% 1.95% 2.0% 1.0% 0.64% 0.47% 0.37% 0.01% 0.0% -0.22% -0.56% -0.41% -1.0% -0.79% 1
Slide 16: After a strong 2025, fixed income returns were muted in Q1
After a strong 2025, fixed income returns were muted in Q1 Fixed Income Index Returns 2025 and YTD 10.00% 9.00% 8.6% 8.6% 7.9% 7.8% 8.00% 7.2% 7.00% 6.3% 6.00% 5.00% 4.3% 4.00% 3.00% 2.5% 2.00% 1.00% 0.7% 0.4% 0.4% 0.00% 0.0% -0.1% -0.2% -0.5% -0.5% High Yield Municipal Taxable Municipal US MBS US T
Slide 17: Municipal yields are attractive relative to other fixed income alternatives
Municipal yields are attractive relative to other fixed income alternatives Yield-to-Worst (%) and Taxable-Equivalent Yields for Municipal Indices 9.6% 7.4% 6.4% 5.1% 4.9% 4.8% 4.6% 4.1% High Yield Municipal High Yield Corporates Municipal Corporates Taxable Municipal US MBS US Aggregrate US Treasur
Slide 18: Municipal yields increased 40-70bps in March and 3-40bps during Q1
Municipal yields increased 40-70bps in March and 3-40bps during Q1 AAA MMD Municipal Curve 5.00 3/31/2026 12/31/2025 4.50 YTD Yield Maturity Year Change 4.00 Yield (%) 2-Year +0.03 3.50 5-Year +0.26 3.00 10-Year +0.40 15-Year +0.27 2.50 20-Year +0.19 2.00 30-Year +0.23 16YR 18YR 10YR 11YR 12YR 13YR
Slide 19: Taxable-equivalent yields continue to look compelling in 10-to-20 years
Taxable-equivalent yields continue to look compelling in 10-to-20 years Though shorter duration municipals have become more attractive, the best value remains out the curve 7.5% 7.55 Taxable-Equivalent Muni Curve Treasury Curve 7.38 6.96 6.5% 6.05 5.27 5.5% 5.10 Yield 4.95 4.80 4.66 4.88 4.36 4.51 4
Slide 20: Investment grade performance ended 2025 in-line with 25-year average
Investment grade performance ended 2025 in-line with 25-year average due to strong second half Bloomberg Municipal Bond Index Calendar Year Returns U.S. Credit Rating Downgrade Enron/WorldCom Scandals 9/11 Fed 4.3% Avg. 12.9% 11.7% Attacks Extended Fed Hiking Cycle COVID-19 Rate Annualized 9.6% 10.7
Slide 21: Current Market Opportunities
Current Market Opportunities
Slide 22: Yields are Elevated: Municipal index yields are basis points above the 10-year average
Yields are Elevated: Municipal index yields are 118 basis points above the 10-year average Municipal Index Yield-to-Worst 6.00% Index Yield to Worst 10-Year Average 5.00% 4.00% 3.77% Yield (%) 3.00% 2.00% 1.00% 0.00% Source: Eaton Vance, Parametric, and Bloomberg. Index data based on Bloomberg Munic
Slide 23: Yields are Elevated: Past periods with 20-year muni yields above 4% proved attractive
Yields are Elevated: Past periods with 20-year muni yields above 4% proved to be attractive entry points Bloomberg Municipal Benchmark 20-Year Index Yield-to-Worst (%) 6 Bloomberg AAA Municipal Benchmark 20-Year YTW (%) 5 4.12% 4 Yield (%) 3 2 1 0 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21
Slide 24: Yields are Elevated: Current yield levels in municipals are elevated vs. historical averages
Yields are Elevated: Current yield levels in municipals are elevated vs. historical averages Bloomberg Municipal Indices Yield-to-Worst vs 5-, 10- and 20-Year Averages Investment grade municipals taxable-equivalent yield High yield municipals taxable-equivalent yield (YTW) (YTW) 9.95% 10.00% 10.00%
Slide 25: Starting Yields Matter: Locking in current interest rates can provide an income cushion
Starting Yields Matter: Locking in current interest rates can provide an income “cushion” and potentially higher returns Average 12-month forward returns for the Bloomberg Municipal Bond Index based on starting yield-to-worst • On average, a higher starting index yield-to- worst has resulted in high
Slide 26: High yield municipals are compelling with absolute yields higher than the 5-year average
High yield municipals are compelling with absolute yields higher than the 5-year average Bloomberg High Yield Municipal Index YTW 6.5 6.0 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 BBG HY Muni Index Yield to Worst Avg Yield +1 Std Dev -1 Std Dev Source: Barclays and Bloomberg, as of 3/31/2026. The index perfor
Slide 27: Steep N' Cheap: Steep yield curves have predicted strong 12-month forward returns
Steep N’ Cheap: In the past, steep yield curves have been accurate predictors of strong 12- month forward returns MMD AAA Municipal 5s/30s Yield Curve 350 GFC Meredith Whitney +10.52% +10.64% Taper Tantrum +9.58% 300 250 200 150 100 50 0 Muni 5s30s Spread Source: Refinitiv as of 3/31/2026. Data prov
Slide 28: Steep N' Cheap: Municipal ratios cheapened in Q1
Steep N’ Cheap: Municipal ratios cheapened in Q1, and longer duration continues to look attractive relative to short and intermediate maturities Muni/Treasury Ratios Muni/Treasury Ratios 12/31/25 and Present 95% 92% 88% 85% 84% 82% 75% 73% 68% 66% 65% 65% 55% 5-Year 10-Year 20-Year 30-Year 12/31/202
Slide 29: Municipal Credit Overview
= EatonVance )> Parametric Municipal Credit Overview
Slide 30: Credit Fundamentals: Most sectors will likely experience stable credit quality in 2026
Credit Fundamentals: Most sectors will likely experience stable credit quality in 2026 However, we believe credit pressure could arrive amid new administration federal policy decisions • State and Local Governments outlook remains stable. States & Water & Higher Charter The median rainy day fund bal
Slide 31: Middle East Conflict: Implications for Municipal Credit
Middle East Conflict: Implications for Municipal Credit Overall municipal market remains resilient, but short-term credit impacts are increasingly sector and state specific Positive Near-Term Neutral Negative • Oil Producing States: • Healthcare: • Transportation: • Higher severance tax revenues • E
Slide 32: State Credit Fundamentals: upgrade/downgrade ratio has weakened
State Credit Fundamentals: Municipal credit quality remains positive, but the upgrade/downgrade ratio has weakened. 2025 Upgrade/Downgrade ratio of 1.3 is the weakest since Q1 ‘22 Source: BofA Global Research, Moody’s Ratings, S&P Ratings as of 12/31/25 Municipal Bond Market Monitor | March 2026 31
Slide 33: State Credit Fundamentals: Elevated rainy day fund balances and conservative spending growth
State Credit Fundamentals: Elevated rainy day fund balances and conservative spending growth give states the financial means to navigate federal funding uncertainties. State Rainy Day Fund Balances & Median Balance as % of Expenditures Median Y/Y Change in General Fund Spending $200 16.0% 12.0% $180
Slide 34: The number of municipal defaults has consistently declined since 2020
The number of municipal defaults has consistently declined since 2020 Number of Unique Annual Defaults Q1 2026 Number of Unique Defaults Decreased Slightly YoY Number of Unique Defaults 160 120 10 80 40 0 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 YTD Q1 2025 Q
Slide 35: Disclosures
Disclosures
Slide 36: Risk Considerations
RISK CONSIDERATIONS An imbalance in supply and demand in the municipal market may result in valuation uncertainties and greater volatility, less liquidity, widening credit spreads and a lack of price transparency in the market. There generally is limited public information about municipal issuers. I
Slide 37: Additional Information
ADDITIONAL INFORMATION Credit ratings that may be referenced are based on Moody's, S&P or Fitch, as applicable. Credit ratings This material has been prepared on the basis of publicly available information, internally developed data are based largely on the rating agency's investment analysis at the
Slide 38: Important Information and Disclosure
ADDITIONAL INFORMATION Important Information and Disclosure TERMS INDEX DEFINITIONS Municipal-to-Treasury Yield Ratios are relative value indicators that measure the richness or Bloomberg Municipal Bond Index is an unmanaged index of municipal bonds traded in the U.S. cheapness of Municipal bond yie
Slide 39: Additional Information
ADDITIONAL INFORMATION The Firm has not authorised financial intermediaries to use and to distribute this material, unless such use EMEA and distribution is made in accordance with applicable law and regulation. Additionally, financial This material is for Professional Clients/Accredited Investors o
Slide 40: Additional Information
ADDITIONAL INFORMATION U.S. NOT FDIC INSURED | OFFER NO BANK GUARANTEE | MAY LOSE VALUE | NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY | NOT A DEPOSIT Latin America (Brazil, Chile Colombia, Mexico, Peru, and Uruguay) This material is for use with an institutional investor or a qualified investor onl