The Federal Reserve’s efforts to contain inflation have taken a toll on the bond markets in recent months. Since the beginning of the year, the iShares Core U.S. Aggregate Bond ETF (AGG) is down more than 16%. While that’s better than the S&P 500 Index, it’s significantly worse than simply holding cash in a high-yield bank account.
With the economy heading into a recession, the central bank’s interest rate hikes could slow over the coming quarters. The slowdown in interest rate hikes could help stabilize interest rates, making the bond market more attractive, particularly as a safe haven. And, thanks to its unique characteristics, the municipal bond market looks especially attractive.
Let’s examine why the muni bond market looks so inviting and where investors can seek out the best opportunities.
municipalbonds.com
by Justin Kuepper
Nov 09, 2022