Salient to Investors:

  • Peter Hayes at Blackrock said nobody really expects rates to rally significantly from here and everybody is waiting for a pullback. Hayes said the muni market is overpriced and said sell into strength and wait for better opportunities.
  • Munis have rallied in each of the first 9 months of 2014 for the first time in 25 years.
  • Chris Alwine at Vanguard said munis are fully valued, overbought and at risk of a backup, especially if we get heavy supply over the remainder of the year.
  • Michael Zezas at Morgan Stanley predicts the muni market to lose 0.88% in the next 12 months.
  • The median analyst forecast expects 10-yr Treasury yields to rise to 3.2% in Q3, 2015.
  • Tim McGregor at Northern Trust and Jamie Pagliocco at Fidelity Investments expect investor inflows to absorb new deals for the remainder of the year and keep yields near current levels.
  • Lipper said individuals have added to muni mutual funds for 14 straight weeks, the longest stretch since October 2012.
  • The ratio of 10-yr muni yields to 10-yr Treasuries has dropped to 90% versus the 5-yr average of 98%.

Read the full article at http://www.bloomberg.com/news/2014-10-20/blackrock-sales-in-october-rally-signal-its-limits-muni-credit.html

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