U.S. bonds gained after the earthquake in Japan, but the safe haven move reversed as Japanese investors went back into yen and out of other assets – Japanese investors are the third-largest holders of U.S. Treasury debt. [Why Current Environment Is Affecting Treasury Yields and ETFs.]
Lately, state munis have also been slammed, driving most muni bond ETFs well below their long-term trend lines. Moody’s Investor Service stated that U.S. municipal governments will face lower demand for debt and higher borrowing costs, due to a combined budget deficit of $100 billion this year and the extension of Bush-era tax cuts, which lowered the attractiveness of muni’s tax-exempt status. [Is There Hope for Muni Bond ETFs?]
For more information on actively managed ETFs, visit our actively managed ETFs category.
Max Chen contributed to this article.
