Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Why Is My Muni-Bond Fund Showing Signs Of Life ?
Old 01-03-2019, 11:22 PM   #1
Full time employment: Posting here.
ownyourfuture's Avatar
 
Join Date: Jun 2013
Posts: 990
Why Is My Muni-Bond Fund Showing Signs Of Life ?

Columbia Minnesota Tax-Exempt Fund Class A IMNTX

To lower my ‘taxable’ income for healthcare purposes, in late July 2016, I sold an underperforming, high dividend paying stock, & started accumulating this fund.

Up until November 2018, it had been pretty much straight downhill, but since that time, it’s been rallying.

Obviously I'm pleased, but with the fed raising rates recently, & announcing 2 more hikes this year, I figured it would keep going down.

Maybe I don't really understand municipal bonds.
Am I missing something ?
__________________
"No beast so fierce but knows some touch of pity, but I know none, therefore am no beast"
ownyourfuture is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 01-03-2019, 11:58 PM   #2
Thinks s/he gets paid by the post
 
Join Date: Sep 2013
Posts: 1,017
When stocks go down bonds look more attractive and their rates drop. The Fed has only a limited ability to control this. Munis are traded in secondary markets just like corporates and other bonds so I would think they would be subject to similar market forces.
stepford is offline   Reply With Quote
Old 01-04-2019, 05:12 AM   #3
Recycles dryer sheets
 
Join Date: Jul 2013
Posts: 286
The Fed has raised the Discount Rate -the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal Reserve Bank. However, take a look at a chart of the 10 year Treasury since November. You will see a steady decline from about 3.23 to about 2.6%. That is why the value of your muni bonds/funds have increased. My asset allocation is currently 27% individual municipal bonds and has been for 20 years. I don't do funds.

Remember to keep in mind this is the very opposite direction the pundits predicted for interest rates. I don't listen to any of them because virtually every word out of their mouths is - may, could, should, possibly, significantly, generally......you get the idea. No one knows where interest rates or the markets are going....no one.
phil1ben is offline   Reply With Quote
Old 01-04-2019, 05:27 AM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 27,033
Simple. Intermediate and long term rates are dropping. Even shorter rates have pulled back a bit. Bond funds rise when this happens.

I think what you are missing is that interest rates don’t move lock-step with the Fed Funds rate. The Fed really only controls the very shortest end of the curve directly. QE unwind has probably pushed longer rates up slightly, but even that is being overwhelmed by current concerns over a slowing economy and folks rushing to the safety of bonds.
__________________
Retired since summer 1999.
audreyh1 is online now   Reply With Quote
Old 01-04-2019, 06:24 AM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 10,200
All bond funds have gone up significantly in the past month or so. The prices are reacting to what human beings think are the prospects for the economy in the near future. Human beings are fickle beasts and often get predictions about the future wrong.
LOL! is offline   Reply With Quote
Old 01-04-2019, 07:49 AM   #6
Recycles dryer sheets
 
Join Date: Jun 2011
Posts: 334
Flight to quality.
pjm-7 is offline   Reply With Quote
Old 01-04-2019, 07:55 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 10,200
A report this morning suggests that the "bond market' is now pricing in no more rate increases in 2019. This is a change from the FOMC press release last month. It's all about expectations and not about what happened in the past.
LOL! is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Anyone use a muni ETFs as an alternative to CDs or muni bond ladders stephenson FIRE and Money 3 01-31-2018 09:45 AM
Why are muni-bond mutual funds tanking? dessert Stock Picking and Market Strategy 20 12-16-2010 07:50 PM
NBA not showing signs of a bad economy RunningBum Other topics 2 07-06-2010 09:17 AM
Muni Bond Fund versus Individual Munis mark500 FIRE and Money 2 03-03-2008 06:44 AM
Hold regular bond in 401k or muni in taxable? soupcxan FIRE and Money 9 04-07-2005 04:54 PM

» Quick Links

 
All times are GMT -6. The time now is 05:28 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2020, vBulletin Solutions, Inc.