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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
|
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)
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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)
|
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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Dissecting Municipal Credit Spreads |
Minyanville - Sept. 19, 2011 - By Howard Simons
Part of Obama's jobs-creation proposal involves a massive federal transfer to the states. Anything that threatens this lifeline would be a negative for municipal bonds.
Attorneys reading this may smile at the following: Most clients want a more complex answer than is necessary. If a problem can be solved by a one-page contract, clients will feel uneasy and demand some real boilerplate for their money. It is really no different in market analysis, especially during the topsy-turvy and heavily manipulated markets we have been living through for what seems like forever: Complexity drives out simplicity.
Let’s take the issue of municipal credit spreads. It is no secret that our state and local governments are in a bad way. Part of President Obama’s otherwise lackluster $447 billion “jobs-creation” proposal, just like the 2009 American Reinvestment & Recovery Act, involves a massive federal transfer to the states. We should expect anything that threatens this lifeline, real or imagined, would be a negative for municipal bonds and would manifest itself in higher option-adjusted spread (OAS) levels.
Look to Treasury Yields
Let’s analyze this in the same way we did for corporate credit spreads earlier this month (see Dissecting Credit Spreads). The yields and OAS levels for four different ratings of municipal bonds, AAA, AA, A and BBB were used along with matching-maturity Treasury yields. The AAA rating matches to 10-year Treasuries, the AA to 15-year Treasuries and both the A- and BBB-rated to 20-year Treasuries. Only the AAA and AA charts will be shown below.
As an aside, I am increasingly uncomfortable using any of these credit ratings at all. We know the ratings firms covered themselves with something other than glory during the whole mortgage mess, and the whole Standard & Poor’s downgrading of the federal government episode culminated with an unceremonious plank-walking sure to have a chilling effect on others who express opinions unwelcomed by their recipients. So saying, nine states have a AAA rating and another 28 have ratings between AA- and AA+. This is really Lake Wobegon stuff.
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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