Elevated Tax-Exempt Yields Boost Muni Appeal
Attractive tax-exempt muni yields present compelling opportunities for investors to enhance income and diversification.
AVERAGE 12-MONTH RETURNS NEAR FED POLICY CHANGES
Source: Morningstar and Bloomberg as of 6/30/2024. Average returns based on 12-month returns following Fed rate cycle changes using monthly data since 12/31/1982. Returns for periods longer than one year are annualized. Money Markets, Short-Term Bonds, and Intermediate Core Plus Bonds are represented by Morningstar mutual fund category averages. Past performance does not guarantee future results.
CHART HIGHLIGHTS
- The Federal Reserve (the Fed) has signaled short-term interest rates cuts soon.
- Over the past four Fed rate cycles, higher-duration bonds outperformed shorter-duration bonds and money markets near Fed policy changes, with the strongest returns before the first cut.
MORE SPOTLIGHTS ON THE MARKETS
Elevated Yields May Boost Bond Return Potential
The Federal Reserve has stated its intent to keep rates in their normalized range, which may make now a good time to allocate to fixed income.
Bonds Increasingly Attractive If Fed Cuts Rates
With the tightening cycle likely complete and rising potential for several rate cuts this year, now may be a good time to allocate to bonds.
Footnotes
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