Muni-Massacre Leaves Bonds Most-Oversold Ever

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."