fed Markets

The Fed’s Mini-Muni Bailout And Why It Matters

"Exigent circumstances".

"Exigent circumstances".
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4 comments on “The Fed’s Mini-Muni Bailout And Why It Matters

  1. When will longer dated maturities enter the mix? –might want to capitulate fully now and improve everyone’s mood.

  2. On top of all the medical-related expenses, unemployment payments will far exceed budgeted amounts.

  3. One thing to be careful of is the discounts on high yield muni ETFs or for that matter any municipal fund in a market like this. Often times the pricing lags what is actually going on in the market (I know I have priced bonds for a living at one time) and price evaluations is extremely difficult because the market is so illiquid and disjointed. What is actually happening in the market can be more accurately reflected in the ETF. This is a long winded way of saying the ETF may not be trading at as big a discount as reflected by the numbers
    you see. Also of note is that these ETFs are constructed with a 25%-50% sleeve of investment grade rated municipal bonds in the BBB-A category as a safety valve. That said a large discount likely indicates some sort of discount in the space.

    • I agree. I have noticed, even as a participating amateur, if you will, that bond prices, especially for munis, often seem to be sticky and slow to react to certain market changes, especially when they are somewhat thinly traded. I really don’t look for the NAVs and the prices for muni CEFs to be more settled and jointly reflective of intrinsic values for at least 1-2 months. As much as I would love to jump into this market, I am 75 and love my cash hoard more, at least for the moment. For sure, right now, “nobody knows anything.”

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