The bond market concluded 2024 on a decline, but municipal bonds may see improvement in January due to the “January effect.” This phenomenon occurs as government agencies delay bond sales post-holidays while investors seek to reinvest nearly $43 billion in interest and principal payments. This supply-demand dynamic typically benefits municipal bonds, which have yielded positive returns in eight of the last eleven Januaries, outperforming Treasuries in five of the last eight instances. However, the market remains influenced by Treasury trends and Federal Reserve interest rate speculations, potentially keeping some issuers cautious in the early months.