Steve Harvey, Standish Senior Portfolio Manager, explains why the recently enacted federal stimulus package will have a welcome, but modest, impact on the municipal bond market:

• The recent federal stimulus package – the American Recovery and Reinvestment Act of 2009 – provides as much as $290 billion that may affect the municipal market.
• The impact is expected to be short-term and modest, but should help stave off a wave of state ratings downgrades. It should also provide some positive benefits in areas such as Medicaid, education, research, highway capital spending and healthcare IT.
• The Act only chips away at the edges of persistent liquidity and credit deterioration in the municipal bond market.
• A more active role by the federal government in improving the municipal market might involve broader fiscal or operating support to help rebalance supply and demand.

For more information or a hard copy please contact, please contact David Zigas at 617 248-6202.

The preceding information is based upon the analysis of historical performance of various asset classes and assumptions with respect to future economic conditions. Past performance is not an indication of future results. This information is not intended to provide specific advice, recommendations or projected returns of any particular BNY Mellon Asset Management  product.