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San Francisco

Municipal Bond

April 29 – May 6, 2011 Municipal Bond and Tax Free Mutual Funds News

municipal bonds

This week (April 29, 2011 – May 6, 2011) saw more of news about the US government’s deficit battles. Tax-free Mutual funds saw continued outflows. The Muni Market has slowly moved back up, perhaps because of a lack of supply. This may be a good time to adjust your asset allocation. The Week’s municipal bond news included:

  • Underfunded Unemployment Funds Put States at Risk. We have heard local news reports covering this in the past. Another area that will cause financial problems for some states. (Bond Buyer)
  • San Francisco wasted $120 million on a bad interest rate swap deal with Ambac. Be sure to look for other municipalities that may have similar issues. (SF gate)
  • Counties and school districts could have broad authority to propose their own personal income tax and other taxes under a proposed bill in California. While no one likes you taxes, this type of aggressive action shows that the politicians are serious about closing the gap. (SF gate)
  • Standards and Poor actually downgraded and then removed their rating altogether on some of DeKalb County, Georia’s municipal bonds. This is a good sign that the major ratings agencies are being more proactive. (ajc)

Individual Bond Municipal Bond News

April 8 – April 15, 2011 Municipal Bond and Mutual Funds News

municipal bonds

This week (April 8, 2011 – April 15, 2011) saw more of news about the US government’s deficit battle. Tax-free Mutual funds saw continued outflows. Tax-free money market funds saw major outflows, undoubtedly for people to pay their taxes. The mutual funds we track were unchanged or up nicely this week and for the month, fund yields mostly fell slightly. Longer duration mutual funds moved up more than shorter duration funds. The Weeks municipal bond news included:

  • San Francisco saw Fitch downgrade some of their municipal bonds due to the use of most of its remaining discretionary reserves, amid continued sizable budget pressures. They did upgrade San Francisco’s future Outlook to stable, as the revenue picture was improving with the economy, and voter approved taxes and fees increases are kicking in. Hopefully this will remind San Francisco to get it fiscal act together. (SFgate)
  • Citibank lost a municipal bond fund case and was ordered to pay $54.1 million to to wealthy investors for their losses. The fund borrowed as much as $7 for every one dollar invested. Money was invested in municipal bonds and mortgage debt. Definitely try to avoid leverage when purchasing mutual funds. (WSJ)

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

Vanguard Tax-exempt Money Market fund (VMSXX) is yielding 0.11%, 0.0% for the week.

Vanguard Short Term Tax-Exempt Fund (VWSTX) +0.06% for the week.
Month to date: +0.06%. February 2011 +0.16%. Current Yield 0.77%.

Vanguard Limited Term Tax-Exempt Fund (VMLTX) 0.18% for the week.
Month to date: +0.18%. February 2011 +0.45%. Current Yield 1.38%.

Vanguard Intermediate Term Tax-Exempt Fund (VWIUX) +0.37% for the week. Month to date: +0.22%. February 2011 +1.52%. Current Yield 3.31%.

Vanguard California Intermediate term municipal bond fund (VCAIX) 0.46% for the week. Month to date: 0.37%. February 2011 +1.72%. Current Yield 3.46%.

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: +0.09%. February 2011 +0.30%. Current Yield 1.73%.

Fidelity California Intermediate term municipal bond fund (FCSTX) +0.09% for the week.
Month to date: +0.09%. February 2011 +0.48%. Current Yield 1.69%.

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: