Municipal
bond yield indices moved lower during the month, continuing
the trend established during the second half of January.
Factors contributing to the ongoing rally include the
relative dearth of new issue supply, a quiet market
overall and an abatement of the deluge of bond fund
redemptions of prior months. Generally, investors continued
to reach for high-quality bonds during the month. This
resulted in lower yields and higher prices in this sector
of the market in particular, with wider credit spreads
at month end. The market rally led to an approximate
30 basis point yield decline for 10 year maturity, non-taxable
municipal bonds during February.
Lastly, the idea of allowing states to file for bankruptcy
-- which current law does not permit -- has been publicly
aired and discussed at length in recent weeks. Congress,
in fact, held hearings on the topic during the month
and it appears the idea has lost traction in Washington,
as of this writing.
Ronald P. Bernardi
President and CEO
Bernardi Securities, Inc.
March 2, 2011
For more information, contact
your Investment Specialist.
RELATED TOPICS:
Interest Rates, Municipal
Default & Disclosure
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