Municipal Bond Forum
Jury still out on how Fed’s bond-buying will effect muni market
Q
Thank you for keeping us clients up to date. I would guess everyone is concerned about the impact of the value of muni bonds if the market is flooded with new money from the Fed. What are your thoughts on this? Thanks for the work you are doing to provide us investors with high quality service. The person at your firm with whom I work, Kara Lucas, is outstanding.
A
James A. Klotz responds:
Thank you for the kind words. We are also pleased to be associated with Kara.
The jury is still out on how the Fed’s second round of bond-buying – designed to lower long-term interest rates and boost the economy – will effect the muni market. One would guess that if the Fed is buying bonds it would cause interest rates to decline. So far, however, the immediate reaction has been just the opposite.
We will try to keep you posted on any new thoughts we have in this regard.
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