Long-Dated Munis Reach Cheapest of 2021 Amid Tax-Hike Debate
- Weakening relative to Treasuries comes as fund inflows slow
- Latest ICI data show smallest intake since outflow in March
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Long-maturity municipal bonds have reached the cheapest levels seen all year as demand for tax-free debt fades with Democratic lawmakers in Congress struggling to determine how to boost revenue to help pay for President Joe Biden’s agenda.
Yields on benchmark 30-year munis are now about 89% of those on similar-maturity Treasuries, the highest proportion of 2021, according to data compiled by Bloomberg. The ratio is extending its climb from record lows set around mid-year as cash flooded into state and local debt, in part from high earners looking for shelter from potentially higher tax levels.