Martin and Mike here with a quick update on the muni bond market …
The big picture in a nutshell?
Just as we warned, their prices are collapsing, driving interest rates sharply higher.
U.S. Treasury bonds, corporate bonds, and mortgage-backed bonds are following a similar pattern.
And as a result, most portfolios loaded with fixed instruments — held by individuals, banks, insurance companies, or others — are now suffering.
The implications? Far reaching!
First and foremost, this decline reflects an accelerating exodus out of bonds of all stripes and colors.
And second, it also seems to be correlated with a comparable RISE in the Dow, as investors switch into stocks.
Can this pattern continue for a while? Of course!
But don’t expect it to last forever; higher rates are ultimately a competitive threat to investments that do not offer good yields.
Plus, let’s not ignore some of the reasons WHY bond prices are falling, including …
- Falling confidence in governments and their ability to manage their finances.
- Growing fears of inflation as the trillions of dollars printed by the Fed begin to find their way into the economy.
- Plus, widespread impatience — and even disgust — among millions of fixed-income investors who feel they deserve a lot more than the miserable yields they’ve been getting on their money.
Bottom line for you: Get out of bonds — while you still can at relatively good prices.
Then seriously consider the many other good investment ideas and strategies we’ve covered here in Money and Markets this week …
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