Writing for On Wall Street in an article published 9/1/2015, Jeff Tjornehoj, who heads up Lipper’s research efforts in the U.S., Canada and Latin America, evaluates whether recent outflows from municipal bond funds might represent misplaced fears. In support of his case, Mr. Tjornehoj points to three factors influencing the municipal market which may either be resolved in the near term, or be somewhat overstated in the headlines. In regard to Puerto Rico, Jeff concludes that while headline risk isn’t going away, the commonwealth has more to lose in a default scenario than by working with creditors. Supply in the municipal market has risen over the past year largely as the result of new issuance the form of refinancing at current rates, ahead of the much-anticipated Fed Funds rate increase. In the current environment, yields on municipal bonds are very attractive relative to Treasuries, adding to the appeal of the asset class. Finally, the US Treasury market has experienced increased volatility amid global economic concerns and the continuing ‘will they – won’t they’ debate over an increase in the Federal Funds rate. Mr. Tjornehoj’s contention is that once the Fed makes their move on rates, a cloud of uncertainty will clear from the markets. See the full article for Mr. Tjornehoj’s discussion of these topics.
You will find information on the Aquila Group of Funds seven double tax-exempt municipal bond funds on this site.
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