Muni-Massacre Leaves Bonds Most-Oversold Ever

Tyler Durden's picture

US Municipal Bond yields have now risen for 10 straight days, spiking from 1.72% to 2.34% today - the highest since July 2015. This crash has now moved munis to the most-oversold-ever as the group suffers the biggest fund outflows since 2013's taper tantrum.

The last 2 times that Muni yields spiked at such a pace marked dramatic buying opportunities...

 

Notably, Munis are also "cheapest" to Treasuries since Oct 2015...

As Bloomberg notes, BofA analyusts have pointed out that "the market sell off in munis is likely to continue to the end of November and into the first full week of December in a slow and negotiating fashion in order to reach an exhaustion point,” the report said.

Bank of America Merrill Lynch projects that the bull market in bonds that began in 1981 should run for another two years given the current and expected health of the global economy.

“This sloppy market provides buying opportunities, in our view."

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Dead Canary's picture

When my father was younger, Nixon took us off the gold standard and you could buy gold again. He wondered if $35 gold was a good buy. He asked his brother-in-law who said:
"Why would anyone buy gold. It doesn't back the dollar anymore!"

Richtus Heb's picture

In a coal mine only an asphyxiated canary signals the dangers of the poisoned air,

but the dead bird's token will only be understood by the experienced miners.

 

ThaBigPerm's picture

So I should hold my Dallas muni bonds then ... nothing but upside

buzzsaw99's picture

the spread has been negative for years? egad.

AUD's picture

About a year. And the spread has recently increased while the stockmarket has risen significantly. Does not compute, look for a top soon if this continues.

olebugger's picture

Comeback for Meredith Whitney?

hedgiex's picture

 

Quote: This sloppy market provides buying opportunities, in our view." Unquote

Markets are only sloppy when you are on the wrong side. This is a loser's tantrum. Leave it to you to shred articles from such mindsets. 

bada boom's picture

Looking at ICI.org, muni bond funds had some good inflows in 2015/2016.  Yet, domestic stocks funds didn't.  It's pretty revealing.  If anything, the people have not been "buying" into the stock rally, yet they have been pushed into the stratosphere.

backspaceone's picture

so funny how Trump is causing the very hyperinflation that everyone though Obama would cause 

Last of the Middle Class's picture

A trillion dollar "infrastructure" investment will only make it worse. It does not change the fundamentals of a very broken economy and only increases the risk of hyperinflation as the FED has printed to the limit of causing hyperinflation already. Can the bond market support it or will it drive interest rates down again possibly into the negative "war on cash" area? It's 8 years later 8 trillion more in debt and the fundamental problem of a week economy haven't even been listed on a piece of paper much less addressed in any way other than perhaps the promise of repeal of the ACA act. Even back as far as early 2000's I remember talk of the damage NAFTA had done as well as the fact that health care was the last remaining vestige of a government untouched economy. We knew then that if the government took over health care the economy was dead. . . forever. Level the playing field should be the driving force rather than any sort of trillion dollar "infrastructure" improvement. You will just spend the trillion and have the same problems you started with. Itr's the   E C O N O M Y stupid sould be everyone's rallying cry.

bada boom's picture

Part of me thinks that the Trump phenomena has been manufactured to jump start the dead economy.  What they don't realize is that when people have no money, it won't help.  Maybe this is directed towards the wealthly, I don't know.  This stock market rally is not being driven by the people.  The sell off in bonds is part the plan as well.

Or, wall street is just building up the markets to unload shares unto the people.  Who the heck knows.  But as many have said, it best not to play the game.