Just when all signs are pointing to a sell-off, munis have gotten on a hot streak. Municipal issuers are rushing to issue as much debt as they can before the new Republican tax plan brings sweeping change to the $3.8 tn market. The current rally, which has seen yields fall to very low levels, does not make sense on paper because it comes when issuance is surging. However, one explanation may be that buyers are expecting issuance to plummet after the tax changes next year, which means they want to stock up on the bonds now.
FINSUM:This rally does make sense in a way. If you think you won't be able to buy any new issues next year, it is logical to buy a lot right now before the new tax package comes in.
- fixed income
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