Municipal bonds just posted their worst monthly drop since 1987.
That's a 37-year record being broken. Not a small move.
Muni bonds are supposed to be the boring, stable part of portfolios. Tax-advantaged income for retirees and conservative investors. When they crater like this, it tells you something bigger is happening under the surface.
Usually means one of three things:
1. Rates are moving violently higher
2. Credit concerns are creeping into state/local finances
3. Forced selling from funds or institutions
Given where Treasury yields have been lately, probably a mix of all three. When the "safe" stuff breaks down this hard, pay attention. It often precedes broader market stress.
That's a 37-year record being broken. Not a small move.
Muni bonds are supposed to be the boring, stable part of portfolios. Tax-advantaged income for retirees and conservative investors. When they crater like this, it tells you something bigger is happening under the surface.
Usually means one of three things:
1. Rates are moving violently higher
2. Credit concerns are creeping into state/local finances
3. Forced selling from funds or institutions
Given where Treasury yields have been lately, probably a mix of all three. When the "safe" stuff breaks down this hard, pay attention. It often precedes broader market stress.
