AAA Municipal Bond vs. U.S. Treasury & Corporate Bonds

Municipal Bond Market: Key Takeaways

  • Nominal yields for 12 year and longer AAA municipal bonds remain higher than U.S. Treasury bond yields.
  • In the 0 – 10 year range most Taxable Equivalent Yields (TEY) for AAA municipal bonds still show value for most tax brackets.
  • On the longer end of the curve, AAA munis and their TEYs show value for the higher tax brackets and benefit most from the tax exempt interest.
  • Verses high quality corporate bonds, such as Apple Inc., AAA muni Taxable Equivalent Yields for the higher tax brackets are competitive. At lower tax brackets, Apple Inc. bond yields are relatively favorable verses municipal bonds.

AAA Municipal Bond Yields vs. U.S. Treasury Bond

ReigerReport_AAAMunicipalBondvsUSTreasuryCorporateBonds_Graph1

Sources: The Bond Buyer www.bondbuyer.com Data Workstation, MBIS Municipal Yield Curves, U.S. Department of the Treasury www.treasury.gov. Data as of 6/1/2018. Chart is provided for illustrative purposes only. TEY = Taxable Equivalent Yield.

ReigerReport_AAAMunicipalBondvsUSTreasuryCorporateBonds_Graph2

Data as of 6/1/2018

Sources: Apple Inc. bond yields provided by SQX https://sqx.com/. Municipal data sourced from the Bond Buyer Data Workstation www.bondbuyer.com and MBIS Municipal Yield Curves. U.S. Treasury bond yields sourced from U.S. Department of the Treasury www.treasury.gov. Chart is provided for illustrative purposes only. TEY = Taxable Equivalent Yield.

ReigerReport_AAAMunicipalBondvsUSTreasuryCorporateBonds_Graph3

Data as of 6/1/2018

Sources: Apple Inc. bond yields provided by SQX https://sqx.com/. Municipal data sourced from the Bond Buyer Data Workstation www.bondbuyer.com and MBIS Municipal Yield Curves. Chart is provided for illustrative purposes only. TEY = Taxable Equivalent Yield.

6/1/2018 AAA Muni Yields vs. Apple Inc. Corporate Bond Yields

ReigerReport_AAAMunicipalBondvsUSTreasuryCorporateBonds_Graph4

Data as of 6/1/2018

Sources: Apple Inc. bond yields provided by SQX https://sqx.com/. Municipal data sourced from the Bond Buyer Data Workstation www.bondbuyer.com and MBIS Municipal Yield Curves. Table is provided for illustrative purposes only. TEY = Taxable Equivalent Yield.

Sources Used in this Report

Notes: 

  • Taxable Equivalent Yield = Tax Exempt Yield / (1 – Federal Tax Rate)
  • 2018 tax brackets, however not all tax brackets are represented herein.
  • End of day yields are used.
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