We have crossed over into the second half of the 2015 calendar year and with that, it is an academic—but instructive—exercise to see where we have been and how we have performed. Because the thesis of this post is that investors are flush with cash from a variety of sources, I hope to make the point that they will have ample opportunity to deploy that cash into a muni market that is more welcoming than at the first of the year.

Let’s Review the Data

The total return for the Barclays Municipal Bond Index for the first six months of the year ending June 30 was 0.11% and for the Barlcays High Yield Municipal Bond Index it was -1.92%. Issuance of municipal bonds was higher by 3.30% year-over-year and outflows, as indicated by The Investment Company Institute (ICI), accelerated through the end of June, contributing to negative headlines and volatility in fixed income markets. Nevertheless, municipals managed a slight gain despite prevailing sentiment.

The table below makes it clear that whether the rate rise was anticipatory of a Federal Reserve (“Fed”) move or in response to market conditions, investors will be rewarded for their patience with an opportunity to garner nearly 50% more yield from muni income products than was available at the start of the year.


Investment Grade Municipal Yield Curve Changes