Yields in the municipal bond market are at the highest
levels in recent memory. The composite of our client’s accounts is reporting a
Yield to Maturity of 3.75%, a Tax Equivalent Yield of 7.61%, and a Yield to
Call of 2.95%. Remember the Tax Equivalent Yield is the return that a taxable
bond would need to equal the yield on a comparable tax-exempt municipal bond in
terms of structure. Examples given of comparable
taxable fixed income and bonds: according to www.wsj.com as of 4/20/23
·
0.49%
Money Market, Annual Yield
·
2.76%
Five-Year CD, Annual Yield
·
3.625%
Five- Year US Treasury Note
·
4.67% 7-Day Yield SWVXX Schwab Value Advantage
Money Fund
·
4.88%
Five-Year High Quality Market (HQM)
Corporate Bond Par Yield (St. Louis Federal Reserve)
Our primary goal is current income or maximizing yield
without downgrading in quality or excessively extending maturities. We are not
“total return” focused like our competitors in the mutual fund and ETF space. Every
MuniBond we evaluate is scrutinized against the yield scale to determine the
attractiveness of the yield considering purpose, credit rating, and structure. The
yield to maturity, not price, of the MuniBond is the return the investor will
realize if the bond is held to maturity.
If not now,
when?
W. Jeffrey
Watkinson
484-540-9218
jeff@watkinsoncap.com
Senior Vice President
#WatkinsonMuniBonds #MuniBonds #municipalbonds