January MuniLand
Report
·
“The January Effect” was in effect as January returns for
The Bloomberg Municipal Bond Index is 0.94%.
·
MuniBond Fund flows (measure of demand) were robust in
January totaling over net positive $6 billion.
·
The Federal Open Market Committee left its target interest
rate unchanged at 3.50%-3.75%
Watch the Curve:
The Municipal Market Data is the benchmark yield curve for
AAA MuniBonds… Jeff’s Excel Graph below.
·
The 4% yields plus year are gettable with maturities
greater than 20 years.
·
We favor the 5% plus Coupon structure with maturities
greater than 20 years priced to a 9-10 call feature. Lock it down.
Watch the Curve:
Part 2
With a $1,000,000 portfolio, the difference of annual coupon payments (Bond
interest you earn) can be as much as $45,000 vs $22,500 depending on the curve.
See the steepening in the Y/Y change in the MMD Yield Curve below.
(Compliments of New
York Life Investments.)
The professional side of the business is to extend duration and secure
the 4.00% plus yields with maturities longer than 20 years with 9-10 years of call
protection.
Higher yields, more cash flow, investment grade credits…
We are securing A-rated or better MuniBonds yielding above 4.50%
Many of the competing MuniBond SMA portfolios have yields in the 2.25%
range with bonds having a bullet maturity of less than 10 years. We sell those bonds
with a sub 3% yields and reposition further out on the curve… gaining 150 bps
or above 50% or more additional yield.
Why invest in
MuniBonds?
Predictable Income
in an unpredictable world
·
Stay Rich and capture yields over 4% with 10 years of call
protection
·
Capture TEYs over 8%... Equity Like returns
·
Second Safest Credit class behind US Treasuries
·
Buying Bonds that finance essential services which are
monopolies. EG: the township is not financing a competing sewer system for your
existing system.
·
Interest accrues 360 days a year MuniBonds is where
prudent Americans have stored and protected their wealth for generations.
·
Ability to turn the news off and collect your predictable tax-exempt
income.
Conclusion
Remember, when an investor buys a MuniBond,
it is like watching your favorite movie…The investor knows how the story ends… EG:
when the coupon will be paid and how much. Also, the investor knows exactly when
the bond matures or could be called away
If you are overweight in cash, CDs, savings
accounts, bond funds, money markets, and are looking to lock down the highest
MuniLand yields in a generation, contact us to gain predictable income and
peace of mind for your “stay rich” assets.
If you own individual stocks with low-cost
basis & large, unrealized gains and wish to lock-in these gains, (I am
looking at you Apple, Nvidia, Microsoft, and more), contact us to discuss
prudent strategies and solutions.
The Outcome will be More Income,
W. Jeffrey
Watkinson, MBA
Co-CIO
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