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Strategies & Market Trends : Value Investing
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To: E_K_S who wrote (50847)2/11/2013 6:04:42 PM
From: Wallace Rivers  Read Replies (1) of 78476
 
"Bonds tend to move in price inversely with the 10 year U.S. treasury rate. The Fed's QE policy is artificially driving down the 10 year treasury yield lower making your municipal bonds increase in value. Over the last few days the 10 year yield surpassed the 2% ceiling rate making several of the bond fund fall in value."

I understand that principal rises if yields drop. Too bad I wasn't a buyer of a bunch of 10 or 30 year treasuries 5 or so years ago.

My point is that these closed end and open end municipal bond funds have dropped 5%-10% in the past month, I think the reason being people are fearful of the administration changing tax rules concerning munis. Anyone who might have any other reasons, that would be great to hear.
In the mean time, this could be a nice buying opportunity.
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