Mutual Fund News

June 2012 Municipal Bond and Tax Free Mutual Funds News

municipal bonds

This month saw more of news about financial market volatility. Tax day has come and past. The Month’s municipal bond news included:

  • 6/1/12: Vanguard Municipal-Bond Funds Try to Up Their Game. – Morningstar has new analysis on Vanguards Tax Free Muni Funds. They have good words to say and point to high securities quality without pressure to take extra risk in order to get a little more yield.
  • 6/14/12: Detroit Postpones $596 Million Water, Sewer Muni Bond Deal – Cities a political squabble that might drive Detroit into default.
  • 6/15/12: Muni-Bond Investors Should Thank Europe – Investors from around the world are buying United States Bonds. This has in turn helped drive up the value of Muni Bonds. Thank You World! The finances of many municipalities are better than Europes!
  • 6/25/12: The large US bank ratings downgrade – The biggest banks were recently downgraded by rating agencies. These banks back variable rate demand bonds. This type if municipal debt will probably get downgraded causing the value of it to fall. Watch out if you own any.
  • 6/29/12: Stockton, California declares Chapter 9 Bankrupcy – The biggest city in America to file bankrupcy is now Stockton. Their problems were caused by the forclosure prices and millions spent on civic improvement projects. They have tried to make ends meet by laying off police and other city employees. All payments will be suspended to bond holders.
  • 6/29/12: June and July are the peak months when municipal bonds mature. Approximatly, $90 billion will mature and most will need to be reinvested in new bonds. On average, only $24 billion in bonds gets issued every month. Because there is limited inventory, investors will be fighting against eachother for bonds. Becareful and do a lot of comparison shopping.

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