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Bank of America Says ‘No Way’ to Negative Municipal-Bond Yields

  • State and local debt would have no tax advantages if so
  • Bank analysts also ‘believe the U.S. can avoid negative rates’
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Pimco's Crescenzi Says Yield Curve Has Become Front Page News

Bank of America Corp., the biggest underwriter of state and local government debt, isn’t worried that municipal-bond yields will turn negative, even if they do in other parts of the U.S. fixed-income markets.

Bond yields have been plunging fast, making it seem possible that American investors could actually wind up paying governments to lend them money -- as is already happening in Japan and much of Europe because of the escalating trade war with China, concerns about slowing global growth and stock market volatility. The yield on 10-year Treasuries has dropped to about 1.55%, with those on tax-free debt about a quarter percentage point less.