FYI: Municipal bonds took investors on a roller coaster at the end of 2017, as prices swung on concerns about what Washington’s overhaul of the tax system will do to the $3.8 trillion market.
Investors, particularly those in top tax brackets, have long sought the income paid by muni bonds because it’s free from federal income taxes. It will remain that way, even after Congress approved sweeping changes to taxes, but lower tax rates for workers dilute the benefit a bit. Washington did eliminate a corner of the muni bond market called “advance refundings,” where state and local governments refinance their debt. There was a rush to issue such bonds before the Dec. 31 deadline.
The topsy-turvy last few weeks capped a strong year for the market. The largest muni-bond mutual fund by assets, Vanguard’s Intermediate-Term Tax-Exempt fund, returned 4.5 percent for its best performance in three years.
Regards,
Ted
https://www.denverpost.com/2018/01/13/what-to-expect-from-municipal-bonds-in-2018/
