(Washington)

Investors may fear it, but we all know the big tax package is coming. Personal income tax rates, and likely business rates will rise. State and local taxes will be affected too. So one big question is how this will pay out for muni bonds. The answer, at least according to Franklin Templeton, is that munis are going to do great. The reason why could not be simpler: with tax rates rising, the relative value of munis rises since their tax exempt status because relatively more valuable.

FINSUM: Anxiety about the forthcoming tax plan is rising, and that is a great tailwind for munis. Couple that with the fact that Democrats are more in favor of federal support for municipalities and you have a great combination for muni bonds.