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| Bonds Online |
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| 5/10/2013Market Performance |
| Municipal Bonds |
|---|
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S&P National Bond Index
|
3.00% |
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S&P California Bond Index
|
2.96% |
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S&P New York Bond Index
|
3.13% |
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S&P National 0-5 Year Municipal Bond Index
|
0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| More |
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| Income Equities: |
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| Preferred Stocks |
|---|
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S&P U.S. Preferred Stock Index
|
848.03 |
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S&P U.S. Preferred Stock Index (CAD)
|
636.26 |
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S&P U.S. Preferred Stock Index (TR)
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1,701.05 |
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S&P U.S. Preferred Stock Index (TR) (CAD)
|
1,276.26 |
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| REITs |
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S&P REIT Index
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174.07 |
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S&P REIT Index (TR)
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425.30 |
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| MLPs |
|---|
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S&P MLP Index
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2,469.58 |
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S&P MLP Index (TR)
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5,428.50 |
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See Data
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Liquidity – The Muni Risk That Meredith Didn’t Mention |
Forbes - May 25, 2011 - by Rob Clarfeld
Meredith Whitney received a lot of attention for her Armageddonesque call on the state of the municipal bond market. I thought that her prediction of “hundreds of billions of municipal bond defaults” was completely unsupported by market fundamentals. While municipals have undergone significant changes, with some added risks, since the financial meltdown of 2008, massive defaults on quality bonds are not going to happen. The past several months have not enhanced Whitney’s credibility, as the Merrill Lynch Municipal Master Index is up 4.20% since her December 19th “60 Minutes” appearance. I continue to assert that high quality municipal bonds should be considered conservative income-generating portfolio anchors for high net worth individuals.
There are other risks besides the potential for default. Interest rate risk is inherent to all fixed income and, after a decade of declining yields, rising interest rates will cut into portfolio total returns. An additional risk that needs to be considered, and is the point of this post, is one that Whitney never mentioned – market illiquidity. To clarify our view, let’s look over the municipal bond landscape over the past few quarters.
In a market of over 55,000 issuers with very unique credit characteristics, it doesn’t make sense that the municipal bond market should be treated as one homogenous asset class. Unfortunately, in countless articles and in proclamations by many pundits, this has, indeed, happened. The alarming headlines, supply/demand imbalances, and an upward movement in yields in the taxable fixed income market, led to significant price declines in the municipal market during the latter half of 2010 as many retail municipal bond mutual fund investors sold en masse. As with other periods over the past few years, many followed headlines rather than thoughtful analyses. Fortunately, since mid-January, the municipal bond market has stabilized quite nicely. I believe this has occurred for a number of reasons.
For the complete article.
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| Stuff to look at |
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| BondsOnline Advisor |
Income Security Recommendation January 2013 Issue.
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