US Municipal Bond Market Data – March 14, 2013

High yield municipal bond yields and relative spreads to investment grade munis have moved to lows not seen since 2008.  The S&P Municipal Bond High Yield Index has shown a positive total return of over 1.68% year to date and over 14% since this time last year.  The yield spread between high yield and investment grade municipal bonds is now at 265bps or 2.65% (on March 15, 2012 the spread was 351bps).


Investment grade municipal bond yields have moved up and prices down two weeks in a row.  These have not been big moves but moves to downside in any event.  Barely in positive territory, investment grade tax-exempt bonds tracked in the S&P National AMT-Free Municipal Bond Index have returned a positive 0.11% ytd.  The weighted average yield to worst for bonds in this index is a 2.14% or about 9 basis points cheaper than the end of the previous week.  The yield to worst results in a Taxable Equivalent Yield of 3.29%.  The Dow Jones Corporate Bond Index is yielding 2.62% to worst, so municipal bonds are remaining incrementally higher yield than their counterparts in the corporate bond market.



Comparing returns of municipal bonds to other asset classes:

Index:                                                                   YTD Returns:

S&P 500 (TR)                                                          10.14%

S&P GSCI (TR)                                                         -0.19%

S&P National Municipal                                              0.11%

S&P Municipal High Yield                                           1.68%

S&P/BGCantor US Treasury 7 – 10 Yr                     -1.33%

Taxable Equivalent Yield based on a 35% marginal tax rate

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