Short Term Muni Rates at Record Lows

Short term municipal bond yields reached record low levels as the Fed has signaled that it plans to keep the Fed Funds rate at 0% for some time.

Short term municipal bond yields reached record low levels as the Fed has signaled that it plans to keep the Fed Funds rate at 0% for some time. Federal Funds futures show that the chance the Fed will raise its benchmark rate by April 2010 are half of what they were a month ago. That has driven yields on short-term muni debt down.

According to Bloomberg:

"Yields in the current municipal market are at or near historic lows,” Gary Gildersleeve, a partner and portfolio manager at New York-based Evercore Wealth Management, which manages more than $1.4 billion, said in an e-mail. “Tax-exempt and taxable money-market funds both yield less than 0.10 percent, and individual investors are looking for ways to improve the yields that they are receiving.”

Investors have pulled more than $90 billion in tax-free money funds this year, according to data compiled by iMoneyNet. The Westborough, Massachusetts-based firm said yesterday that the average yield on the funds, which invest in municipal debt, returned to a record low of 0.04 percent first reached Nov. 9."

 

Sam Cass
Sam Cass: Sam Cass, MBA, JD, University of Texas at Austin. Always a fan of Leonardo Da Vinci.

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