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[Municipal bonds rebounded 4 to 9 basis points following US Treasuries, with market sentiment turning bullish, but caution is advised against a sharp drop due to a potential breakdown in peace talks] ⑴ The US municipal bond market rebounded across the board on Tuesday, with yields across all maturities falling 4 to 9 basis points, following the decline in US Treasuries, while US Treasuries themselves fell 5 to 8 basis points. Market expectations of a possible peace agreement between the US and Iran were the main driving force. Despite overnight events including a so-called "self-defense" strike by the US and threats of retaliation from Iran, the financial markets largely ignored these negative news and focused on hopes for a de-escalation of geopolitical tensions. ⑵ Jim Quealy, head of municipal trading at Appleton Partners, said that the municipal bond market had previously under-followed the recent rebound in US Treasuries, and Tuesday's rally had a certain catch-up component. Jeff Timlin, managing partner at Sage Advisory, pointed out that the extremely bearish tone of the market last week may have caused yields across asset classes to deviate too far, and investors are now tentatively re-entering the market. Ajay Thomas, head of public finance at FHN Financial, described Tuesday as a "bond rush," with the approaching June 1st redemption date, expectations of peace in Iran putting downward pressure on oil prices, and last week's capital inflows all contributing to the increased attractiveness of municipal bonds. (3) Institutions generally remain cautious about the sustainability of the rebound. Kim Olsan, senior fixed income portfolio manager at NewSquare Capital, believes that hopes for peace may be dashed again, but overall, US Treasuries have found support. Andrew Clinton, CEO of Clinton Investment Management, pointed out that rising interest rates are largely driven by the situation in the Middle East; if the conflict stops or the Strait of Hormuz reopens, energy prices will fall, the impact of inflation will weaken, and yields will naturally decline. Quealy warned that if municipal bonds rebound another 10 basis points without new news on Wednesday, they may be slightly overbought; more importantly, if peace talks break down, the market will "go back to square one" and trigger a new round of selling. Thomas observed that the stock-bond yield spread is narrowing, and some investors who believe the stock market is overbought may turn to the more stable bond market.