Municipal Bond

March 4 – March 11, 2011 Municipal Bond and Mutual Funds News – State Empolyees Declining

municipal bonds

This week (March 4, 2011 – March 11, 2011) saw lots of news about Wisconsin’s impasse being hammered through by the Republicans. The mutual funds we track were unchanged or down slightly this week and for the month, fund yields fell slightly. Longer duration mutual funds, both much more than shorter duration mutual funds. This weeks municipal bond news included:

  • A deep-freeze in new municipal bond issuance has hit the Muni bond market. The current quarter has seen the lowest amount of new issues in 11 years. This should not be a surprise having seen the glut of new issues late last year with the expiration of the build America bond program. Investors and constituents are now savvy and will not tolerate the kind of bloated budgets seen in the past. (WSJ)
  • Municipal Bond outflows have continued even though the market has stabilized for the last couple weeks. (Bond buyer)
  • DoubleLine Bond guru Jeff Gundlach called municipal bonds the new subprime mortgage bonds on CNBC. He states that things are going lower. They weren’t surprised if his remarks would cause another municipal bond mutual funds sell off. He expects the long end of the Muni Market to go down by at least 15 to 20%. He wouldn’t be surprised if the buy-and-hold Muni bond crowd becomes nervous as the falling starts. DoubleLine does not have any municipal bond funds. (CNBC)
  • The other bond guru Bill Gross, has sold all US treasuries held in his mammoth Total Return Bond fund. He sees Treasuries falling after Quantitative Easing 2 ends at the end of June 2011. We may just see a big move in the bond market in July. (PIMCO)

Vanguard Municipal Bond Mutual Fund Weekly Price Movement (Detailed stats)

Vanguard Tax-exempt Money Market fund (VMSXX) is yielding 0.12%, -0.01% for the week.

Vanguard Short Term Tax-Exempt Fund (VWSTX) +0.0% for the week.
Month to date: +0.06%. February 2011 +0.16%. Current Yield 0.82%.

Vanguard Limited Term Tax-Exempt Fund (VMLTX) -0.09% for the week.
Month to date: +0.18%. February 2011 +0.45%. Current Yield 1.44%.

Vanguard Intermediate Term Tax-Exempt Fund (VWIUX) -0.07% for the week. Month to date: +1.0%. February 2011 +1.52%. Current Yield 3.33%.

Vanguard California Intermediate term municipal bond fund (VCAIX) +0.0% for the week. Month to date: +1.3%. February 2011 +1.72%. Current Yield 3.53%.

Fidelity Municipal Bond Mutual Fund Weekly Price Movement (Detailed stats)

Fidelity Short-Intermediate Muni Income Bond Fund (FSTFX) +0.09% for the week.
Month to date: +0.18%. February 2011 +0.30%. Current Yield 1.79%.

Fidelity California Intermediate term municipal bond fund (FCSTX) +0.0% for the week.
Month to date: +0.28%. February 2011 +0.48%. Current Yield 1.85%.

See how the Fidelity intermediate term municipal bond fund (FCSTX) and Vanguard California intermediate term municipal bond fund (VCAIX) performed this week on this graph:

See how the municipal bond mutual funds we listed above performed this year on this graph:

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