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A Massive Gap Explains Why Muni Prices Are Testing Record Highs

edited January 2020 in Fund Discussions

A Massive Gap Explains Why Muni Prices Are Testing Record Highs

/(Bloomberg) -- Over the next month, about $25 billion of municipal debt will be paid off. Bondholders will receive another $13 billion of interest payments in February. And mutual funds have pulled in nearly $7 billion of new cash already this month.

Yet over the next four weeks, only a fraction of that money may find new securities to buy: American states and cities are so far set to sell just $13 billion of bonds in that time, according to data compiled by Bloomberg./

We have stopped buying Munis hy and bnd in our sepira and brokerage past 3 months been buying more stocks...we are indeed overwt in bonds in our portfolio
For mama retired portfolio we kept buying fbnd


  • Interesting take on the muni market.
  • edited January 2020

    The tax law changes also impacted the refinance/issuance of new bonds. As noted in above, from Dec 2018:

    Muni Bond Supply Is Down

    Far and away, the most notable effect that the tax overhaul had on the municipal market this year was through the elimination of a valuable cost-saving tool for municipalities. Called advanced refunding bonds, the tool allowed governments to refinance debt earlier, thus letting them take advantage of lower interest rates years sooner.

    Losing this benefit has pushed down supply. By some estimates, it's cut refinancing activity by as much as 20 percent.
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