Why a 'stagnant economy' could be good for municipal bonds
12/16/2023 01:29
Municipal bonds may not get the same attention that other parts of the bond market do, but they can still play an important part of a bond portfolio. PIMCO's Head of Municipal Bond Portfolio Management, David Hammer, joined Yahoo Finance's Rachelle Akuffo to discuss renewed investor interest in municipal bonds amid improved bond markets. Unlike treasuries and corporates, Hammer explains that longer-maturity muni bonds can offer higher yields than short-term alternatives. He describes how munis stand to benefit from the Federal Reserve's shifting stance towards rate cuts in 2024. Hammer says PIMCO sees a "stagnant economy" in 2024, which provides a "pretty good macro backdrop for muni bonds." With banks like Citi (C) announcing it's closing its municipal bond business, Hammer highlights the trend of banks becoming "less present" in this market. As large institutions continue exiting, it opens an "opportunity for investors" to pursue relatively high, tax-advantaged muni yields. For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Municipal bonds may not get the same attention that other parts of the bond market do, but they can still play an important part of a bond portfolio. PIMCO's Head of Municipal Bond Portfolio Management, David Hammer, joined Yahoo Finance's Rachelle Akuffo to discuss renewed investor interest in municipal bonds amid improved bond markets.
Unlike treasuries and corporates, Hammer explains that longer-maturity muni bonds can offer higher yields than short-term alternatives. He describes how munis stand to benefit from the Federal Reserve's shifting stance towards rate cuts in 2024. Hammer says PIMCO sees a "stagnant economy" in 2024, which provides a "pretty good macro backdrop for muni bonds."
With banks like Citi (C) announcing it's closing its municipal bond business, Hammer highlights the trend of banks becoming "less present" in this market. As large institutions continue exiting, it opens an "opportunity for investors" to pursue relatively high, tax-advantaged muni yields.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.