Rieger Report: Quietly higher- Municipal bonds continue to shine

A detailed Wall Street Journal article today Markets in 2016: The Year of the Pig clearly shows that many asset classes are continuing to show volatility and negative returns however municipal bonds have been resilient. Tax-exempt investment grade municipal bonds tracked in the S&P National AMT-Free Municipal Bond Index up 1.24% year-to-date and high yield municipal bonds tracked in the S&P Municipal Bond High Yield Index up 1.13%.

Taxable municipal bonds however have jumped ahead as the S&P Taxable Municipal Bond Index has returned 3.59% year-to-date.  Relative to corporate bonds this segment of the municipal bond market has longer durations and higher coupons which both contribute to positive price movement as rates move down.

Table 1: Select bond indices, their yields and returns

Source: S&P Dow Jones Indices, LLC. Data as of February 23, 2016.

Source: S&P Dow Jones Indices, LLC. Data as of February 23, 2016.

Table 2: Select bond indices and key characteristics

Source: S&P Dow Jones Indices, LLC. Data as of February 23, 2016.

Source: S&P Dow Jones Indices, LLC. Data as of February 23, 2016.

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