“2021 was a big year,” said Tom Kozlik, Hilltop Securities’ head of municipal research and analytics. “In a single year, we saw more fiscal policy focused on public finance than we have ever seen.” However, some investors may now be anticipating the Federal Reserve’s expected interest rate hikes, which could result in price decreases. However, […]

Even for advisors who rely on institutional muni bond managers to update holdings based on interest rates, credit quality changes, and other factors, putting together a muni bond portfolio is difficult. “If you do it yourself, you may walk into a tragedy,” Weinberg warned, emphasizing the high level of supervision required for muni bond investing.

Bond prices decline when interest rates rise (and vice versa), with long-maturity bonds being the most susceptible to rate changes. This is due to the fact that longer-term bonds have a longer duration than shorter-term bonds, which are closer to maturity and have fewer remaining coupon payments. Long-term bonds are also more vulnerable to interest

When the Fed buys bonds on the open market, it expands the economy’s money supply by exchanging bonds for cash to the general public. When the Fed sells bonds, it reduces the money supply by taking cash out of the economy and replacing it with bonds. As a result, OMO has a direct influence on

The immediate impact of an increase in bond prices on interest rates is the most obvious. The interest rate on a $100 bond is 5% per year if the bond pays $5 in interest per year. If the bond price rises to $125, the annual interest rate will be merely 4%. What happens if the

High-yield bonds, unlike many other forms of bonds, are not particularly susceptible to rising interest rates. This is because interest rates typically climb as the economy grows, resulting in larger business profits and consumer spending. For high-yield issuers, this is excellent news, as it usually means reduced default rates. It also helps that the US

Market interest rates and bond prices often move in opposing directions, meaning that when rates rise, bond values fall. Retirees can lessen interest rate risk by investing in shorter-term bonds that are less susceptible to rate hikes. Experts suggest that rising interest rates may be beneficial to retirees who have a longer time horizon. What

Because bonds are frequently regarded safer than stocks, they compete with equities for investor cash. Bonds, on the other hand, typically provide lesser returns. Are bonds immune to a stock market downturn? Down markets provide an opportunity for investors to investigate an area that newcomers may overlook: bond investing. Government bonds are often regarded as

Monetary policy, specifically the path of interest rates, has a considerable impact on bond yields. Bond yields are calculated by dividing the bond’s coupon payments by its market price; when bond prices rise, bond yields fall. Bond prices grow when interest rates fall, while bond yields decline. Rising interest rates, on the other hand, lead

A drop in the federal funds rate means less opportunities to profit from interest for income-oriented investors. Treasury bills and annuities issued recently will not pay as much. Investors will migrate money from the bond market to the equities sector as interest rates fall. The equities market rises as more capital enters the market. What