Seeking Alpha

Another bad year in store for munis?

  • Municipals are "a credit market with a rates problem," says Morgan Stanley's Michael Zezas, seeing a base case (60% probability) of total returns of -1.7% to -4.1% in 2014. The bulk of the negative returns should come early, he says, thanks to the 10-year Treasury yield rising to 3.45%.
  • The bull case - in which the economy slows and the 10-year yield slides to 2.3% - has munis returning between 3.5% and 6%. The bear case - growth jumps and the 10-year rises above 4% - sees losses of 6.2% to 10%.
  • When to jump in? When "loss cushions outpace expected rate increases," he says, and when "market duration has extended."
  • Muni ETFs: MUB, HYD, BAB, PZA, MUNI, TFI, ITM, HYMB, MLN, CMF, BABZ, XMPT, BABS, SHM, SUB, PRB, PZT, SMB, NYF, CXA, PWZ, PVI, SMMU, MUAF, INY, MUAD, MUAG, MUAE, VRD, MUAC, GMMB, RVNU
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Comments (1)
  • youngman442002
    , contributor
    Comments (5131) | Send Message
     
    add in another 20 cities file for bankruptcy.....
    3 Dec 2013, 03:27 PM Reply Like
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