Municipal Bond Forum
Waiting for Greenspan
Q
I wanted to invest my money after Greenspan spoke recently, expecting to invest at higher rates since everyone expected the Fed to raise rates. What’s going on? Why are rates not rising? The long end of the muni curve was higher yielding before Greenspan spoke. The short end of the curve is also lower yielding before Greenspan spoke. Should I continue to wait knowing that the Fed will continue to raise rates in the future? Is this rally in the market just a fluke?
A
James A. Klotz responds:
Actually, long-term bond rates are lower today than they were when the Fed began its series of short-term rate hikes in June 2004. The reasoning is the Fed, by raising short-term rates, will keep inflation in check. Inflation concerns cause long-term yields to rise.
Start here.
Do you have specific criteria for bonds you’re looking for? Let us know and we’ll e-mail you bonds that fit your needs. There is no charge for this service.
The responses provided in this forum are meant to address specific questions posed by investors about their municipal bonds and to provide market insight for our general audience. Please note, your investments, objectives, results and experience may differ significantly. Our answers and any potential strategies discussed should not be construed as a solicitation to buy nor sell any security or investment product. All investing entails risk.
