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When muni bond values decline


Like many others, I’m suffering watching my muni bond values decline. I’m a 20-year bondholder at FMS and never had this sick feeling before. Then again, I’m a little older (77) and the chances of collecting my principal at maturity is poor-to-maybe. I could have sold when values were up but chose not to, so here I am collecting dividends until call (hopefully) but maturity (20 years plus) is not going to happen. My bond specialist at FMS tells me that the situation is “manmade” and new bonds are more attractive than my bonds, so I guess I’m stuck with less desirable bonds that will outlive me. I do look forward to reading all of your newsletters.

D.H., Florida


James A. Klotz responds:

Of course, none of us are happy when our muni bond values decline, but we are assuaged that it isn’t due to a quality or credit problem and our tax-free income should continue to be paid in a dependable manner.

As the Fed reacts to inflation over the ensuing months, we expect the economy to slow and long-term interest rates to decline.

We outline this current phenomenon in our recent article, “OMG, What Happened to My Municipal Account Values?

Apr 19, 2022

Start here.

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