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Municipal Bond Market Replies |
rffrydr
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 Posted: Mon Sep 26, 2011 9:14 pm Post subject: |
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This month, 27 states will have to pay $1.2 billion to the federal government in interest on the $37.5 billion that they borrowed in recent years to keep paying unemployment benefits.
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rffrydr
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rffrydr
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nodoodahs
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Joined: 06 May 2005
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| Posted: Wed May 11, 2011 8:05 am Post subject: |
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Unlike the Greeks, 'austerity' does seem to be implemented with the munis. Plus the fears, as usual, were overblown.
Watch any proposed legislation to end muni tax exemptions as potential muni-buying opportunities (for those that trade discretionarily). Those bills are 'fetchers.' IMO best 'maturity' bond strategies are based on ladders and incrementally buying 'fear' with the coupons and maturing debt.
Taxable munis look like a potential orphan class.
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rffrydr
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rffrydr
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nodoodahs
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| Posted: Fri Apr 22, 2011 2:30 pm Post subject: |
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Still thinking about this hypothetically (because this scenario doesn't fit my current situation), but if I were a fixed-income manager following my preferred FI strategy (semi-laddered and held to maturity), I'd be allocating my maturing debt and coupons to the overweight purchase of low quality, high duration, and municipals right now.
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rffrydr
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Joined: 30 Oct 2005
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| Posted: Thu Apr 21, 2011 8:28 pm Post subject: |
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Yup, many "challenging choices." But the first is always pay the notes.....and the second, raise the taxes.
As far as the "percentage of recoveries" you can count the default of munis proper on one hand. And the hit on those wasn't close to 50%. For high bracket individuals in a 1% CD world it would be foolish not to be picking around in your own backyard--whether the Economist calls your state's democracy failed or not.
http://www.economist.com/node/18586520?story_id=18586520
Stay away from the stadium office projects, the Mello-Roos tie ins, the aquatic parks--and even the toll roads.
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nodoodahs
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rffrydr
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| Posted: Wed Apr 20, 2011 2:52 pm Post subject: |
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Ah the powers of fiat. Now close to 25 straight weeks of public dumping this stuff. Hold your nose and don't bite on the CRE loans masquerading as muni debt and buy, higher rates to come or no.
| Quote: |
By CONOR DOUGHERTY
State tax collections continued to click up in January and February, thanks in part to tax increases, but remain well below their previous peak.
States in the Red
In 45 states that have reported collections, tax revenue in the first two months of 2011 was up 9.5% from the same period a year earlier, according to a report to be released Tuesday by the Nelson A. Rockefeller Institute of Government at the State University of New York. If that pace held over the quarter it would be the fastest growth rate since the second period of 2006, well before the recession started.
State collections, which plunged after the downturn, have climbed in recent quarters, thanks to the improving economy and tax increases passed after the recession.
Local governments have seen a different trend: Their tax revenue rose during and after the recession, and only recently has started to weaken.
This divergence is due to differences in how state and local governments are funded. While states get most of their revenue from income and sales taxes, local governments are heavily dependent on property taxes. It can take local governments two years or longer to reassess property values to reflect falling prices. That means much of the downdraft in income for local governments from falling housing prices has yet to be fully felt.
States, meanwhile, have seen an abrupt rise in income-tax receipts. In the first two months of the year, personal income taxes increased 14.2% in the 45 states tracked by Rockefeller. Corporate income taxes, which are volatile, were up 11.5%. Sales taxes rose 5.2%.
Despite the recent improvement, state tax collections remain well below peak levels. That peak was hit in 2008, after the recession officially started due to the usual lag between when the economy falters and when the weakness shows up in tax collections. In 2010, states collected $715 billion in total tax revenue, about $60 billion or 7.8% below their take in 2008.
"Tax revenue is continuing to recover, and the [first quarter] could be the strongest we've had post-recession," said Don Boyd, a senior fellow at the Rockefeller Institute. But "it's still a ways back."
While most of the recovery in tax collections is due to the strengthening economy, revenue also has been propped up by tax increases made duringin the past few years. The Rockefeller Institute estimates that in the past six quarters, tax increases have added about $30 billion to states' coffers, meaning their tax collections were about 3.5% higher than they would have been in the absence of new or higher taxes. Illinois, for instance, saw its personal income tax collections jump 25.7% in the first two months of 2011, partly due to a controversial income tax increase passed early in 2011—but which is retroactive to Jan. 1. Over 2010, the largest tax increases were disproportionately concentrated in California, Massachusetts, New Jersey, North Carolina and New York. |
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HenryTo
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Joined: 06 Aug 2004
Posts: 11253
Location: Los Angeles, California
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| Posted: Wed Jan 19, 2011 9:00 pm Post subject: |
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Have to agree with Gross and Fitterer on this one:
http://www.bloomberg.com/news/2011-01-19/best-muni-bond-manager-fitterer-says-whitney-call-on-defaults-is-overblown.html
| Quote: | | Fear of defaults has driven down prices of municipal bonds that have nothing to do with state or local governments, including tax-exempt bonds linked to corporate credit, Fitterer said. He cites as an example bonds the fund owns issued by the Indianapolis Airport Authority, which are backed by Memphis, Tennessee-based Federal Express Corp., the second-largest U.S. package-shipping company. |
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dash
Veteran Poster
Joined: 12 Apr 2005
Posts: 488
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| Posted: Sun Jan 16, 2011 5:56 am Post subject: |
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Yields are rising sharply on munis:
| Quote: | | Yields on 30-year triple-A rated general obligation bonds shot higher to 5.01% on Thursday, reflecting a spike in perceived risk, according to Thomson Reuters Municipal Market Data. The last time those bonds yielded 5% was Jan. 30, 2009, during the financial crisis. |
http://online.wsj.com/article/SB10001424052748704307404576080322679942138.html?mod=WSJ_hp_LEFTWhatsNewsCollection
And on European sovereign debt. Meanwhile equity markets continue to march higher, seemingly oblivious. This reminds me a little of the reaction (or rather lack of a reaction) we saw in the early days of subprime. |
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rffrydr
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| Posted: Fri Jan 14, 2011 9:52 pm Post subject: |
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I'm not goin' with oil or europe for our next selldown--thinking homegrown. Have stayed clear of munis all the way through but I believe (as below) that their first order tax authority combined with the fact that they will never go away make them money good (most defaults 'til now have been some subsidiary dedicated infrastructure project). Nonetheless these "safety first" investors are, for that reason, prone to panic--retail and institutions. One more disappointing jobs number and.....
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rffrydr
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| Posted: Wed Dec 15, 2010 9:02 am Post subject: |
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Gross putting $4.4 million into his own funds--he also has the tax bracket to make this pay.
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rffrydr
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