What looks like the start of a complete collapse in Muni bonds appears to have been completely overlooked by the press of popular opinion, as well as bloggers. In a post titled Muni Bonds are in Big Trouble on October 28th, I outlined my case as to why I am rather bearish on the prospects of muni bonds and how I thought they were poised for a significant fall. Well, they have not just fallen, they have completely collapsed over the last few three days...the only problem is that I cannot seem to find out what has been the cause of this collapse, let alone the trigger.
It seems that the Irish Debt crisis has grabbed the headlines over the last few days, but what is happening on the Muni front appears somewhat more horrific than the Greek debt front. For sometime I have "postulated" that any run on US treasuries is liable to start from within the US itself rather than some foreign country simply deciding to dump treasuries. A foreign central bank dumping US treasuries will only occur if there is some sort of trigger, well, maybe we are staring at that trigger. I only wish I had the ability to short muni bonds, well, I guess I will have to settle for shorting US treasuries instead and bide my time.
Disclosure: Long TBT