Our Thoughts

Returns on Muni Bonds Soar

The market for debt sold by states, cities and government related activities is producing some of the best returns for 2014.  Municipal bonds have posted their longest string of monthly gains in more than two decades!  2014’s gains stand out following the $3.7 trillion sector’s 2.55% decline last year driven by Detroit’s record bankruptcy and Puerto Rico’s financial woes. What is behind the rally?  In 2014 the low overall borrowing by cities and states has reduced the supply of bonds, while higher tax rates have increased the relative attractiveness of tax-exempt municipal debts to investors looking for a haven.  Subscribers to the Wall Street Journal may read the article here.  Marjorie