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YIELD COMPARISON REPORT - AS OF 5/19/22

APA
May 18, 2022
1 min read

Updated: Mar 21, 2025

Municipals have dislocated from taxable fixed income sectors as sustained mutual fund selling continues to pressure the tax-exempt market. Year to date, muni mutual funds have seen outflows of $63 billion—a significant move but one that has created an entry point at the highest sustained levels since 2009 for certain parts of the curve. The 10-year AAA muni spot is trading at 102% of Treasuries, vs. the 1-year low of 56.5% and the long-term average of 85-90%. Additionally, as is detailed in the table below, AAA municipal taxable equivalent yields offer a measurable pick up above AA and A-rated corporate counterparts across the curve. Finally, the municipal credit picture continues to look strong, with many issuers experiencing record tax collections while continuing to reap the benefits from the outsized federal stimulus. As a result, with current market conditions, we believe tax-exempt municipals look attractive relative to other fixed income alternatives.

“As a result, with current market conditions, we believe tax-exempt municipals look attractive relative to other fixed income alternatives.”

Source: Municipal Market Data, Bloomberg.

*Highest Federal Tax Bracket of 40.8% includes the 3.8% net investment income tax.

Source: Municipal Market Data, Bloomberg.

Disclosures:

Past performance is not a guarantee of future results. Investing involves risk including the potential loss of principal. APA is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about the advisor’s investment advisory services can be found in its Form ADV Part 2 or Form CRS, which is available upon request.

APA-2205-25