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ARMOUR Residential REIT, Inc. Message Board

  • metropolis954 metropolis954 Nov 14, 2012 2:38 PM Flag

    Money flowing into Municipals

    From CNBC "Why Muni Bonds Are Suddenly So Popular"

    [Part of article]

    "Investors are barreling into municipal bonds, driving yields to record lows and hoping for a safe hiding place at a time when taxes are almost certain to rise.

    From Nov. 7 to 12, about $500 million of new money flowed into muni bond funds, according to Lipper U.S. Fund Flows. That compares to $866 million for the entire week ended Nov. 7 and is about the same as the four-week moving average.

    "The argument that's been made for at least the last six months, is that on relative value basis, it's better to buy a muni than a Treasury because it's tax-advantaged," said Peter Bianchini, managing director and senior municipal bond strategist at Mesirow Financial. "If you were to buy a triple-A-rated state versus the U.S. government, they're both fairly safe credits. With the end of the election last week, there was this new sentiment -- tax rates are going up."

    The charge by investors into the tax-free securities has been creating a surge in demand that is not quite being met by supply and is causing some to question whether the muni bond market could be heading for a bubble."

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