Why Municipal Bonds Are Outperforming Treasuries

The video discusses the unusual market performance in 2018, highlighting how movies outperformed treasuries and the five-year average. It analyzes monthly returns, noting deviations from expected trends, and examines factors like interest rates and supply that influenced performance. The speaker advises caution due to atypical seasonal patterns and potential institutional selling, which could impact market dynamics.

What was one of the key factors that led to the strong performance in May 2018?

• Increased tax rates

• Significantly lower rates

• Lower demand for municipals

• Higher interest rates

Why might the usual seasonal patterns not be as relevant for predicting returns this summer?

• Unpredictable market conditions this year

• Stable interest rates

• Higher supply than demand

• Increased reliance on historical data

What is the typical effect of light supply on municipal performance?

• Leads to underperformance

• Has no effect

• Leads to outperformance

• Causes market instability

What does a net negative supply indicate in the context of municipal markets?

• There is no impact on the market

• More money is being pulled out than created

• More money is being created than pulled out

• Supply and demand are balanced

What is one potential factor that could influence market performance despite typical predictors?

• Predictable seasonal patterns

• Increased retail buying

• Institutional selling

• Stable supply levels