First Year of Losses Since ’08 Warns Morgan Stanley: Muni Credit
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After the biggest rally in U.S. local bonds in more than a decade, investors should prepare for the first year of losses since 2008, analysts at Morgan Stanley and Municipal Market Advisors predict.
The $3.7 trillion muni market has earned about 20 percent since the start of 2011, the best two-year run since 2001, Bank of America Merrill Lynch data show. The gains have been spurred by bets that taxes will rise and by the Federal Reserve’s move to increase holdings of longer-dated Treasuries.