Will May and June be good for munis?

MAY 14, 2012
• According to S&P: - Upgrades of muni bonds outpaced downgrades 121 to 83 in Q1 2012. - Credit quality in U.S. public finance appeared to stabilize overall in Q1 2012. - The gulf between stronger and weaker credits may grow in some sub-sectors. • Depending upon whose definition you use, between 6 and 17 issuers "defaulted" in Q1 2012, about the same number as in Q1 2011. • S&P revised its outlook to positive from stable for California — one of the three largest U.S. issuers of municipal bonds. • The Federal Reserve Board has clarified that the Volcker rule will not take effect until July 21, 2014. With flows continuing to favor municipals, BBB-rated munis are receiving recommendations as their spreads to investment-grade muni bonds continue to compress. Even in a rising rate environment, the less volatile BBBs have historically outperformed investment-grade munis and have provided a potential cushion to a diversified portfolio. Historically, May and June have been strong months for municipals due to reinvestment opportunities. Yes, I expressed that same theme at the end of 2011, but I continue to see some slack in new issuance, setting the stage for a continuation of the positive relationship between demand and supply. I still see some soft spots in the road ahead, specifically with some smaller, local municipalities, but with modest expectations, I believe we should be able to comfortably reach the end of next quarter. James Colby is the senior municipal strategist for Market Vectors ETFs.

Latest News

UBS moves toward full-service US bank as plans to extend wealth business
UBS moves toward full-service US bank as plans to extend wealth business

Employee accounts, crypto trials and job cuts frame a pivotal year for the Swiss lender.

$5B broker-dealer NBC Securities has a new name after almost 30 years
$5B broker-dealer NBC Securities has a new name after almost 30 years

New name draws on founder's family history as consolidation reshapes the broker-dealer landscape.

Cerity Partners enters new market with Cordant Wealth Partners merger
Cerity Partners enters new market with Cordant Wealth Partners merger

Deal brings tech-focused planning expertise, expanded Pacific Northwest presence to national RIA platform.

Treasury unveils Trump Accounts fund lineup led by BlackRock, Vanguard, and State Street
Treasury unveils Trump Accounts fund lineup led by BlackRock, Vanguard, and State Street

Five low-cost index ETFs to anchor Trump Accounts as advisors weigh options against 529 and UTMA plans for clients

House panel unanimously advances advisor compensation reform bill
House panel unanimously advances advisor compensation reform bill

A bipartisan proposal aimed at aligning advisor compensation rules with modern business structures is headed to the full House.

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income

SPONSORED Why direct indexing stopped being optional

Direct indexing is on pace to outgrow ETFs and mutual funds. Northern Trust's Ken Lassner explains why the advisors who get it wish they had started sooner.