Record High Muni Prices Leave Investors Waiting to Buy the Dips
- Cash influx, seasonal slowdown sends valuations to record high
- 10-year benchmark munis yielding about 70% of Treasuries
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The record high valuations in the municipal-bond market have put some investors in an unusual position: rooting for a surge in supply that would push down prices.
With new cash pouring into mutual funds and a steep slowdown in the pace of new debt sales this month, the yields on 10-year tax-exempt bonds have been hovering around 70% of those on Treasuries. That measure, a key gauge of relative value, hit about 66% in mid-January -- the lowest in at least two decades -- signaling that the prices of state and local bonds are unusually expensive.