Company: OIA
Filing Date: 2025-05-02
Form Type: N-CSR
Source: 0001193125-25-111534
Chunk: 0

Company: Invesco Municipal Income Opportunities Trust
Filing Date: 2025-05-02
Form: N-CSR
Chunk 0
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Market conditions and your Trust During the fiscal year ended February 28, 2025, investment grade municipal bonds returned 2.96%, high yield municipal bonds ret urned 8.12% and taxable municipal bonds returned 6.20%. 1 At the beginning of the fiscal year, global economic growth was better than expected, largely due to a resilient US economy. The US Federal Reserve Board (Fed), in its efforts to rein in inflation without harming employment or the overall economy, continued with a transitional stance after its most aggressive monetary policy since the 1980s. The Fed left the federal funds rate unchanged over the fiscal year until September, when it began a series of three rate cuts through the end of the calendar year, resulting in a target rate of 4.50%. 2The Fed remains committed to a 2% inflation target, while acknowledging the progress made thus far to gradually move toward a more neutral policy stance. 2 Municipal supply initially continued at a steady pace as issuers, with cash on their balance sheets, had been reluctant to issue at higher interest rates; however, this trend reversed through the fiscal year, as issuers aimed to get ahead of the US presidential election in November. The uptick in supply brought the fiscal year’s new issuance total to $522 billion, up 33% from the previous year’s $393 billion. 1 The fiscal year was also constructive in terms of inflows to municipal funds. Following two calendar years of outflows in 2022 and 2023, the municipal market began its return to more positive levels over the fiscal year. 3The fiscal year had a total of $43 billion in net inflows, which was a significant increase from $10 billion of outflows in the previous fiscal year. 3 At the end of the fiscal year, municipal credits were still benefiting from federal pandemic aid and strong tax collections, with credit rating upgrades still outpacing rating downgrades. 4We expect credit quality to remain generally stable in the near term, with fewer upgrades but no major increase in downgrades or defaults. With two anticipated rate cuts before the end of calendar year 2025 and a steady supply of new issuance, we believe high absolute yields, strong fundamentals and investor migration out of cash will present positive opportunities for municipal bonds. We continue to rely on our experienced portfolio managers and credit analysts to weather economic challenges while seeking to identify marketplace opportunities to add long-term value for shareholders. During the fiscal year