Municipal bond funds have been on a tear, and the munis market still looks relatively cheap compared to U.S. Treasuries.
Benchmark 10-year muni yields dipped 0.28 percentage point to a 20-month low of 1.83% this month, one of the steepest declines since January 2014, Bloomberg reports. Bond yields and prices have an inverse relationship, so a falling yield corresponds with higher bond prices.
Nevertheless, muni debt is close to their cheapest since December 2013 relative to Treasuries. Looking at the rates on state and local bonds relative to federal debt, the ratio of interest rates hit 106 percent Thursday, which suggest that municipal bonds have weakened relative to the federal debt. Historically, the muni-to-Treasuries ratio has been below 100% since interest on state and local debt is tax-exempt, which make the assets more attractive for high-income investors.
******
The D2 Capital Management Tax Free Income Portfolio is currently yielding 4.58% (Trailing 12 month Tax Equivalent Yield at 28% Tax Bracket, as of 19 January 2015). Year to date the portfolio is up 1.30%
The views expressed here are that of myself or the cited individual or firm and do not constitute a recommendation, solicitation, or offer by myself, D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.
The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville. The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.
No comments:
Post a Comment