The stimulus plan making its way through Congress contains some provisions that may aid the municipal bond market. A version of the stimulus bill supports infrastructure state and local infrastructure programs and also make it more attractive for banks to own municipal bonds. Some of the TARP may also be headed into municipals. Legislation introduced by Barney Frank would provide government guarantees on municipal debt.
All of this will result in a more robust municipal market that will lead to more debt issuance. This will help states but it will also suppress the yields that municipals provide. At the moment, I believe municipals offer a relativel low-risk way of getting above average returns. Some states are paying between 6-8% Federal and state tax-free.
It remains to be seen how the stimulus will impact the municipal bond market.
Comments
Tom
February 10, 2009
@King
California, New York and Oregon are all paying rates that are 8%+ tax equivalent. I think that's what the writer meant.
I just heard from a friend that he got 6.5% tax free in Massachusetts turnpike munis. The tax equivalent rate, depending on income tax bracket is 8%+.
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StupidOne
February 10, 2009
I can read quite well. If you had one iota of sense, you would realize that when Bush proposed a stimulus plan, he did not get the push back Obama is now getting. As Obama said to the critics who called it a spending plan, that is what a stimulus plan is, to spend to try to revive the economy. My point was the previous posters who had things to say about Obama. He has not been in office a month yet, give him a chance. If McCain, was in there, I would say the same thing. This is a forum for discussion, if you are against the stimulus plan, what are your suggestions? Tax cuts?
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Stupid one is a Genius!!
February 11, 2009
You are correct Mr.Iota.We are discussing.Until the constuition becomes ratified.I will use my 1st amend.The "Freedom of Speech" discussion and so on!Tax cuts, No prision time for white collar fraud ie: manipulation of markets.Maybe one day "Cowardism" and "Give Away Programs" will be eradicated from this country.Then you will see "Stability and Humanity" come back!!!!!
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