(January 2021)
Advisors don’t need to be told that rates are at ultra-low levels. Yet despite this, munis are still maintaining their attractiveness. Muni issuance was at a recent high in 2020 (the highest level since 2013) with $3.9 tn outstanding. The reason why is that many municipalities have been seeing budget shortfalls because of COVID. Despite the big jump in issuance, demand has kept pace, with investors gobbling up as much as municipalities can issue. Demand has started well this year too, with muni ETFs seeing gains.
(New York)
FINSUM + Magnifi: The key feature to notice here, is that munis still look quite attractive on a relative yield basis. Average yields on munis are about 0.86% right now, which compares to a taxable equivalent of 1.53% for those in the high income tax bracket. That is attractive because 10-year Treasuries currently only yield 1.138%, so munis still look quite desirable.
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