The falling yields on later dated munis reveal investors’ waning outlook on rising yields from half a century lows.[related_stories]
“We’ve come a long way in a few months, but going forward, munis can hold onto this flatness or flatten even further,” John Dillon, managing director at Morgan Stanley Wealth Management, told Bloomberg. “Individuals have this greater comfort that long-term rates aren’t going to get away from them, and they’re getting the idea that reinvesting in two-year paper isn’t producing any kind of return.”
For more long-term municipal debt exposure, ETF investors can look at the Market Vectors AMT-Free Long Municipal Index ETF (NYSEArca: MLN), which has a 11.7 year duration and a 2.75% 30-day SEC yield, or a 4.55% taxable equivalent 30-day SEC yield.
iShares National AMT-Free Muni Bond ETF