Muni Bonds: Time to Dive In?
Municipal bonds are traditionally one of the safest havens in times of economic uncertainty. But lately, investors have been treating them like just another distressed asset class. Less than six months ago, munis may have reached their cheapest levels since just after the Civil War, says Ying Chen Li, muni strategist in JPMorgan Chase's (JPM) fixed-income department. In the latter half of the 1860s, defaults on state government-issued bonds surged not only because of the ravaged economies of the Confederacy but also because of a clause in the 14th Amendment to the U.S. Constitution that prohibited repayment of public debt issued to aid the rebellion against the Union.
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