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Municipal Bonds Can’t Escape Red October

• The S&P Municipal Bond Index fell 0.66% in October and is down 0.82% year-to-date
• Taxable municipal bonds tracked in the S&P Taxable Municipal Bond Index fell 0.77% in October and is down 1.88% year-to-date
• Municipal bond sectors spooked the worst:
  • S&P Municipal Bond Tobacco Index (Tobacco Settlement bonds) was down 2.92% in October (the index is up 3.82% year-to-date.
  • Impacted by Tobacco bonds, the S&P Municipal Bond High Yield Index was down 1.2% in October (the index is up 4.17% year-to-date)
  • The 10 year range tracked in the S&P Municipal Series 2028 was down 1.11% in October and is down 3.16% year-to-date. Yielding 3.1% the index is jus a few bps cheaper than the 10 year MBIS AA Municipal Curve.
• Yield curve shifts in October:

10 Year AAA Municipal Bonds  +28bps

10 Year US Treasury Bond   +10bps

10 Year Apple Inc. Bonds  +27bps

Data as of 10/31/2018.

Sources: Municipal bond yields & performance data sourced from The Bond Buyer www.bondbuyer.com Data Workstation and MBIS www.mbis.com and S&P Dow Jones Indices www.spdji.com. Apple Inc. bond yields provided by SQX https://sqx.com/

Data as of 10/31/2018.

Sources: Municipal bond yields sourced from The Bond Buyer www.bondbuyer.com Data Workstation and MBIS www.mbis.com, U.S. Treasury bond yields sourced from the U.S. Department of the Treasury www.treasury.gov and the S&P 500 Dividend Yield data as of 10/26/2018 and was sourced from S&P Dow Jones Indices www.spdji.com. Current indicated dividend yield is used. Chart is provided for illustrative purposes only.

Data as of 10/31/2018.

Sources: Municipal bond yields sourced from the Bond Buyer Data Workstation www.bondbuyer.com and MBIS www.mbis.com Municipal Yield Curves, U.S. Treasury bond yields sourced from the U.S. Department of the Treasury www.treasury.gov. Chart is provided for illustrative purposes only. TEY = Taxable Equivalent Yield at tax rate assumption stated.

Data as of 10/31/2018.

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

Data as of 10/31/2018.

Sources: Apple Inc. bond yields provided by SQX https://sqx.com/. Municipal bond yields sourced from the Bond Buyer Data Workstation www.bondbuyer.com and MBIS www.mbis.com.  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 at tax rate assumption stated.

Data Resources Used in this Report:

• Municipal bond yields: the Bond Buyer Data Workstation https://dataworkstation.bondbuyer.com/
• Municipal bond yields: MBIS https://mbis.com/
• Apple Inc. bond yields: SQX https://sqx.com/
• U.S. Treasury bond yields: U.S. Department of Treasury https://www.treasury.gov

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

Analyst Disclosure:

• JR Rieger and or the Rieger Report LLC has not received compensation either directly or indirectly from the sponsor(s) of the ETF(s) included in this report.
• At the time of this writing, JR Rieger does not own the ETF(s) cited in this report, nor bonds issued by Apple Inc.
• Between July 1st and July 13th 2018, JR Rieger purchased insured municipal bonds and AA and higher rated municipal bonds in the 8 – 14 year maturity range. In September 2018 JR Rieger purchased insured municipal bonds in the 10 year range.

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