High-grade, tax-free municipal bonds have been trading above 5 percent, a historical buying indicator according to bond advisors. Taxable-equivalent yields on instruments like that are between 8.5 percent and 9 percent depending on your state residency and tax bracket. Think about it: if you are a US dollar-based American citizen in a higher tax bracket, where else can you get a compounded 8.5% on a fully taxable investment for a period of years?
Bondview surveyed several well respected advisors and the majority say they have lengthened duration while moving to the buy side. They are are buying where we they can and altering accounts and mixes of accounts. One advisor said “bargains abound – you can get ny paper 4% 15 yrs and 5% out longer – national paper is cheaper. Another said “They say they are “are taking advantage of this very opportunistic time.”
Good Luck To All,