Wednesday, October 15, 2008
Muni Bond Yields
"Municipal money-market yields are soaring as investors flee tax-exempt debt in a rush to safety across the credit markets. ... Tax-free money-market funds saw $23 billion in net outflows in recent days, according to iMoneyNet Inc., as investors have flocked to safer Treasurys. ... The yield escalation has been striking. According to a Securities Industry and Financial Markets Association index, high-quality municipal bonds rose to 7.96% Wednesday, from 5.15% in the prior week and 1.79% the week before that. ... But now 30-year municipal bonds yield about 120% of 30-year Treasurys. That ratio is 'about as high as it's ever been,' says Matt Fabian, senior municipal analyst at Municipal Market Advisors", Diya Gullapalli at the WSJ, 27 September 2008.
People flock to Treasurys for safety? Wild!