SDHY - A Taxing Moment

• The new Administration's tax proposals, in year one, total some $3.9 trillion, according to Moody's Analytics estimates.
• Yields on munis sank to 1.14%, which is their lowest since 1979. Also, the municipal bond spread to Treasuries is near historic lows.
• Yields have gone up somewhat in the Treasury market, but there will be a point when the Fed will step in and increase its balance sheet to keep yields near historic lows.
• The Fed may also extend its buying further out on the yield curve as one methodology to hold interest rates down. It should also be noted, as Treasury yields have risen, that corporate bonds have compressed against Treasuries.

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