It seems that Municipal Bond yields are the highest in 6 years.
``Current conditions arguably represent the most stressed fixed income market in our lifetimes,'' Mike Nicholas, co-chief executive of the Regional Bond Dealers Association, said in a statement. The Alexandria, Virginia-based trade group canceled a conference in Dallas this week because of the market turmoil.
Average yields on the highest quality 30-year municipal bonds have risen 42 basis points, or 0.42 percentage point, since Sept. 11 to 5.24 percent today, based on an index compiled by Concord, Massachusetts-based Municipal Market Advisors.
You just have to worry about revenue from these municipalities if there are large banks failing (and taking their tax revenues with them) in their territory. So in other words New York and California Muni's may have room to drop if things get worse. The good thing is that Municipal Bonds rarely fail.
The historical default rate on single-A-rated munis is 0.0084 percent - 80 times lower, according to rating agency Moody's Investors Service, than the historical default rate on triple-A-rated corporate bonds.
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