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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
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3.00% |
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S&P California Bond Index
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2.96% |
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S&P New York Bond Index
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3.13% |
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S&P National 0-5 Year Municipal Bond Index
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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
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848.03 |
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S&P U.S. Preferred Stock Index (CAD)
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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)
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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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Wrong About Municipal Bonds |
Seeking Alpha - August 21, 2011 - By Dr. Duru
Back in mid-May, I sold my holdings in the iShares S&P National Municipal Bond ETF (MUB). I purchased MUB in December of last year because the big discount seemed to big to resist; I was also mimicking Bill Gross’s dive into munis at the time.
My reasons for selling seemed obvious enough to me at time as I attempted to balance risk versus reward:
The MUB shares had already gained more than their annual yield, and
Imminent economic weakness (signaled by the bond market) would further damage state and local budgets and eventually send assets like MUB back to the bargain bin.
Since then, MUB has gained another 3%. At a time when the stock market is at 11-month lows, MUB is reaching for 52-week highs. This strong performance is occurring even after S&P downgraded municipal debt to AA+ status (11,500 bonds reliant on federal spending).
So what happened? The market for munis is diverse and many investors are unwilling to part with munis easily. Last year’s end of the Federal government’s prop to the muni market through the Build America Bonds (BABs) program was part of a rare moment of panic for this asset class, exceeded of course by the panic from 2008′s credit seizure.
Some of the vitriol directed at Meredith Whitney for making her dire calls on state and local budgets has provided an instructive display of the protective/defensive nature of the muni market (there are plenty of counter-analyses to Whitney’s claims as well, for example, “Meredith Whitney Overreaches With Muni Meltdown Call“). Most importantly, there remains a strong abiding faith in the commitment and ability of muni debtors to find a way to pay their bills.
An interesting article in Bloomberg caled “Muni Investors ‘Keep Their Heads’ After S&P Downgrades Issues” on August 11th, provides a small laundry list of statistics that indicate both robust demand for munis and some undercurrents of bearish activity:
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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