Record High Value a Cause for Concern for Muni Bond Bulls

The video discusses the performance and valuation of municipal bonds (munis) since 2014, highlighting their strong performance since November 2018. It examines the muni curve compared to the US Treasury curve, noting opportunities and potential pullbacks. The video also explores market dynamics, including the January effect and seasonal trends, with a focus on retail demand. Finally, it compares munis to Treasurys and corporate bonds, emphasizing the favorable tax-adjusted yields of munis and their broad appeal to investors.

What has been the trend in municipal bond performance since November 2018?

• They have been declining steadily.

• They have remained stable with no significant change.

• They have been highly volatile with frequent ups and downs.

• They have shown strong performance, up almost 4%.

What is the market's expectation after consecutive months of positive performance in munis?

• A continued upward trend without any pullback.

• A significant market crash.

• A pullback to get some money off the sidelines.

• A shift towards investing in corporate bonds.

What effect does the January effect have on the market?

• It causes a rally due to overpowering demand.

• It stabilizes the market with no significant changes.

• It results in a market crash.

• It leads to a decrease in demand.

How does the retail demand for munis in 2019 compare to historical data?

• It is weaker than in previous years.

• It is about the same as in previous years.

• It is stronger than any historical data available.

• It is unpredictable and varies greatly.

Why might municipal bonds be more attractive than corporate bonds for certain investors?

• They offer higher pre-tax yields.

• They have lower risk compared to corporate bonds.

• They provide better tax-adjusted yields for certain tax brackets.

• They are more liquid than corporate bonds.