Biggest 30-to-10 Spread Since 2011 Prompting Buyers: Muni Credit
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The longest-term municipal bonds offer a buying opportunity, analysts at JPMorgan Chase & Co. and Citigroup Inc. say, as yields reach a two-year high following Detroit’s bankruptcy and concern over the Federal Reserve curbing bond purchases.
Benchmark munis due in 30 years yield 4.64 percent, or about 1.8 percentage points more than 10-year borrowings, data compiled by Bloomberg show. That’s the widest gap since January 2012 and compares with an average of 1.14 percentage points since 2001. While 30-year muni yields jumped 1.67 percentage points since the start of May, similar-maturity U.S. Treasury rates increased 0.87 percentage point, the data show.