Muni Bonds are Booming – And You Can Still Get In

[ETF Daily News]( December 18th, 2023 [Muni Bonds are Booming – And You Can Still Get In]( Recent weeks have seen a massive global bond rally on growing optimism the Federal Reserve has nearly finished hiking interest rates and will soon have to hit pause on its tightening regime. Just look at what has happened in the normally very quiet world of municipal bonds. Spoilers: there’s still time to get in… Munis are issued by state and local governments, and generally pay tax-exempt interest at the federal, and potentially state levels. The proceeds from municipal debt fund a wide range of state and local infrastructure projects, including schools, hospitals, universities, airports, bridges, and highways, as well as water and sewer systems. Muni Bonds Are Hot Municipal bond trading soared to an all-time high in November, as retail investors snapped up bonds, driving the market’s best month of performance since the 1980s. Muni bonds posted a 6.3% return in November, the best month of returns since 1982. There were 1.5 million trades in November, which was a monthly record, according to the Municipal Securities Rulemaking Board. The regulator said that demand from small investors was a major factor in the spike in trading. This led to, in November alone, AAA benchmark yields dropping more than 90 basis points depending on the maturity, according to Bloomberg data. This swift, surprising surge has been enough to lift returns and erase losses. The Bloomberg muni index is now up over 3% for the year, a rebound from a loss of 2.2% at the end of October. Benchmark yields for muni bonds due in 10 years and rated AAA are now down to 2.6%, their lowest since April 2023. A very low supply of new bond sales from state and local governments has provided an additional lift for the muni market. When returns turn positive, municipal bond funds begin to see investor cash come back. For example, investors added about $292 million to municipal-bond funds during the week that ended November 22—marking a reversal from 11 consecutive weeks of outflows—according to LSEG Lipper Global Fund Flows data. While December may not have as much momentum as November did, the last month of the year has tended to stay in the green. December muni returns have been positive since 2014, according to Bloomberg Intelligence. The return for November is creating a bit of buzz for this often-overlooked asset class. Karen Altamirano, an analyst with Bloomberg Intelligence, said in a report: “The tremendous reversal of fortune and subsequent run of wins has muni buyers tripping over themselves.” But be careful, and don’t just pay any price for munis. A similar November trend has played out in the previous two years. After three months of losses from August through October, munis rallied in November in both 2021 and 2022. Last year, the end-of-year gains were due to—you guessed it—increasing expectations that the Federal Reserve would… Continue reading at [INVESTORSALLEY.com]( NOTE: If URLs do not appear as live links in your e-mail program, please cut and paste the full URL into the location or address field of your browser. [Privacy Policy]( | [Terms & Conditions]( This email contains a paid advertisement.This is not a solicitation for the purchase or sale of securities. Readers are encouraged to conduct their own research and due diligence, and/or obtain professional advice, prior to making any investment decision. Advertisements and sponsorships are provided as a service to Stock News users. Stock News is not responsible for their content, services or products. The statements and opinions contained in this advertisement are not those of Stock News, and Stock News disclaims any liability for or arising from such statements and opinions. You are hereby advised that Stock News is receiving a fee as compensation for the distribution of this advertisement. [Click here to unsubscribe]( Copyright © 2023 ETF Daily News, part of StockNews.com - POWR Stock Rating, Market Outlook & Investment Insights Magnifi Communities, 1 Penn Plaza, Suite 3910, New York, NY 10019