Bonds
Trump Clawbacks of FEMA Aid Present Risk to Muni Bonds, MMA Says
- DHS pulled back $80 million in FEMA grants to New York City
- Mayor Adams office is working to recoup withheld FEMA funds
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Municipal bond investors are being advised to scale back positions in credits that receive significant sums of money from the US government, as President Donald Trump seeks to affect state and local policy by withholding federal funding.
“It seems likely that Trump and Elon Musk will continue to find ways to cut back on federal assistance to cities and states from whom they want a policy change,” said Matt Fabian, a partner at Municipal Market Analytics. “Investors should be more careful with borrowers who have a deeper reliance on federal funding.”