The yield environment, despite many hopes, has stayed weak, with investors hungry to grab anything above the paltry average yield. This has led to a flood into municipal bonds, which have tax-free advantages and are considered safe. However, the reality is that many area's creaking public budgets mean munis seem to be not nearly as safe as many presume. Hartford, CT, Illinois, and Puerto Rico, for instance, are having very significant budget problems. Yet, municipalities continue to increase borrowing, and investors are snapping up the debt at an increasing pace, with sales this year up 8% over the same period in 2016.
FINSUM : The system appears to be fraying at the edges, and it seems like over the next few years many investors are going to be burned badly.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.