BSMT - Ahead Of The Fed: Don't Delay Return To The Muni Market
2024-03-22 05:00:00 ET
Summary
- Historically, putting cash to work in munis before easing began resulted in significantly higher returns than waiting until after cuts started.
- Investors who entered the market two to three months before the first Fed rate cut saw more than double the 12-month return of those who waited until just one month after.
- Investors who remain parked in cash equivalents will likely fail to keep up with the muni market, especially on an after-tax basis.
Historically, Early Birds Enjoyed the Stronger Muni Returns
Historical analysis and forecasts do not guarantee future results. Returns based on Fed easing cycles whose first cuts occurred on the following dates: September 20, 1984; June 7, 1989; July 6, 1995; January 3, 2001, September 18, 2007; August 1, 2019. Assumes a 40.8% tax rate. Muni bonds represented by the Bloomberg US Municipal Bond Index; Three-Month Treasury Bills represented by the Bloomberg Short Treasury 1-3 Month Total Return index. As of December 31, 2023 (Source: Bloomberg, US Federal Reserve and AllianceBernstein (AB))
