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The municipal-bond revival

  • Municipal-bond prices have soared so far in 2014, compared to the same time one year ago. 2013 was the markets worst year in almost two decades, after registering losses nationwide - ranging from Detroit's municipal bankruptcy-protection filing to pension costs in Illinois.
  • The revival of the $3.7T municipal-bond market comes as bond buyers attempt to find higher investment returns amid dropping U.S. interest rates.
  • Investors have also poured $3.1B into municipal-bond mutual funds this year, compared with $2.9Bn over the same period in 2013.
  • Municipal bonds have returned 5.8% in 2014, reflecting interest payments and price appreciation.
  • Yields on municipal debt fell to 2.3% this past Wednesday, which was their lowest in almost a year. Yields fall when prices rise.
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Comments (4)
  • june1234
    , contributor
    Comments (2697) | Send Message
     
    Indexes and bonds going up in tandem for 6 months, normal in tooth fairy land
    30 May, 06:46 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (8692) | Send Message
     
    Yield is king.

     

    If it provides yield...its going to go up in value.

     

    Deflation is the law of the investment land at the moment.
    30 May, 09:26 AM Reply Like
  • eternitus141
    , contributor
    Comments (163) | Send Message
     
    You can thank Mr. Obama for this one. The tax rate on regular way bonds is at a sky-high 43.4%. Part of this is a natural revaluation as this made munis 15% more attractive on a relative basis, part of this is declining interest rates.
    30 May, 09:29 AM Reply Like
  • ARG1
    , contributor
    Comments (919) | Send Message
     
    Also, muni bonds are being called, the amount of bonds offered is shrinking so supply and demand is supporting prices.
    13 Jun, 02:47 AM Reply Like
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