Thursday, May 21, 2009

Municipal Bond Strength: A Bit of Risk Appetite Among Investors

Here's a two-year chart of daily closes for the Vanguard Intermediate-term municipal bond fund (VWITX). Note how we've recovered from the large losses late in 2008 and now are back up to the prior price highs. In a low interest rate environment, those tax-free yields have looked attractive to retail investors and, amidst hopes of economic stabilization, investors have been willing to move away from Treasuries and into munis.