Articles

With new vehicles of and means to purchase US Savings Bonds, there are more things to be cautious of with the government.

BestCashCow's Lynne Ashminov interviews Tom Doe from Municipal Market Advisors on Build America Bonds. What are they and do they present an opportunity for the individual investor?

BestCashCow's Lynne Ashminov interviews Tom Doe from Municipal Market Advisors on what's happening in the municipal bond market. The interview includes current municipal bond opportunities, an assessment of municipal bond credit risk, and Tom's opinion of the biggest challenge facing muni investors today. Part I of a two part interview.

Once again, tax-exempt municipal bonds outperformed the Treasury market last week, although this may have been due to inattention during a holiday-shortened trading schedule and the large East Coast snowstorms. Still, demand remains exceptionally strong, fueled by investors fleeing the tax-exempt money funds and looking for a safe shelter from rising income tax rates.

With buyers feeling some trepidation over low nominal yields, rich relative valuation to Treasuries, concerns over a diminished BAB presence in 2010, and eroding credit quality, the municipal market experienced a modest correction at the end of January. However, weakness appears to have faded, in particular with the President’s weekend announcement of a proposal to expand the BAB program.

Once again, municipals held on to low nominal yields; however, tax-exempts did lag the Wednesday and Thursday flight to safety rally in Treasuries last week. More muni participants are actively discussing the possibility of a correction in prices this week: a reasonable development noting moderate institutional gains taking on Friday and the potential for a stock market rebound early this week. If yields do rise, long bonds appear most vulnerable.

Municipal bonds survived last week with slightly lower yields, a flatter yield curve, tighter credit spreads, and aggressive price bumps in many of the larger primary market loans. These were all despite a large new issue calendar, another downgrade for California, and a rally in Treasuries that made tax-exempts a relative drag on performance.

Municipal bond interview with Tom Doe, Founder and CEO and Matt Fabian, Manager and Lead Director of Municipal Market Advisors. The interview summarizes the municipal bond market for the week of January 11, 2010.

Here are the results from the much anticipated SIFMA 2010 Municipal Issuance Survey.

Municipal bond yields as tracked by The Bond Buyer 20 weekly index of 20-year general obligation yields slid 1 basis point to 4.18%. That's the lowest level since Oct. 8. It continues a year in which yields on municipals and all bonds have slid while bond values have risen.

It pays to do your homework and I am sure investors of this fund will not make that mistake again. www.bestcashcow.com/bond_resources/index.html

There are several types of municipal bonds but general obligation bonds are the safest. Here's how you can ensure you are purchasing or holding general obligation bonds.

The Municipal Bond market is heating up with $11.3 billion in new issuance planned for the week. This comes on the heals of a correction in the municipal bond market that saw rates rise from near record lows and inversely, bond prices fall.

Yields on long-term municipal bonds are significantly higher than short term munis and are at a historical high over Treasuries. Is now the time to go long?

Analyst Martin Weiss, who sounded an early warning bell on Bear Stearns and Lehman Bros, says that it is invevitable that California will default on its municipal bond obligations.