Will Trump Target Muni-Bond Tax Break? Market Sees Little Chance
- President, Treasury Secretary have show support for subsidy
- Muni yields shows that tax-break most valuable since 2010
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Donald Trump and Treasury Secretary Steven Mnuchin have expressed support for maintaining the tax break on municipal bonds. The market takes them at their word.
As the Republican president embarks on a push for tax cuts, top-rated state and local government bonds due in five years are yielding just 65 percent of comparable Treasuries, holding near a more than seven-year low, according to data compiled by Bloomberg. That shows that investors are still placing a high value on the tax exemption. If they expected the tax break to be eliminated -- or chipped away at -- municipal yields would rise closer Treasuries to compensate for that risk.