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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
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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
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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)
|
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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Muni Bonds: The Math of Misery |
THE WALL STREET JOURNAL - Nov. 29, 2010 - by Josh Brown
Historically speaking, when muni bonds yields have been higher than Treasurys, it’s been a pretty good time to buy. While this is exactly the situation we are in now, history is probably a lousy guide. The finances of individual states have perhaps never been quite so miserable - despite assistance from the federal government.
USA Today’s John Waggoner crunches the numbers:
In normal times, a municipal bond yield is about 15% lower than a Treasury bond with a similar maturity. You had to be in a high tax bracket to make those lower yields worthwhile. But these aren’t normal times. A 10-year high-rated municipal bond now yields 3.12%, while a 10-year Treasury note yields 2.92%. You could be in the lowest tax bracket and munis would be a smarter choice.
What makes munis even more attractive, however, is their tax-free status. Let’s say you’re in the 25% federal tax bracket. Your 2.92% taxable yield would fall to 2.19% after taxes. (Treasury securities are free from state and local taxes but not federal.)
Sounds great, until you consider the headwinds being faced by cities and states across the nation.
And then you have other somewhat non-traditional headwinds that they just didn’t teach us about in muni school. According to Waggoner, these include declining revenues from tobacco tax (yes, people are quitting), a monstrous supply of new muni bonds, the spectre of higher interest rates and a very panicky environment.
The math sounds great, but the misery of the muni market has left many unconvinced so far.
Source:
You Don’t Have to be Rich to Cash In on Municipal Bonds (USA Today)
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| Stuff to look at |
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| BondsOnline Advisor |
Income Security Recommendation January 2013 Issue.
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