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Municipal bonds, favored for their tax-free income, are looking at a solid year in 2024 and could be a compelling purchase for investors hoping to lock in attractive yields. "We will likely see positive total returns," said Cooper Howard, fixed income strategist at the Schwab Center for Financial Research. "Munis are one of the best things going in the fixed income space," he said. It provides all the attributes of fixed income, and it serves as ballast to an overall diversified portfolio." Naturally, rates are on the minds of fixed income investors and strategists, as well as recession risk.
Persons: Cooper Howard, who've, Peter Higgins, Ben Barber, Schwab's Howard, Paul Malloy, It's, Beth Foos, Malloy, Howard, you've Organizations: Schwab Center, Financial Research, Morningstar U.S, Municipal, Shelton Capital Management, York Life Investments, Franklin, AAA, Vanguard, Bond, Morningstar Locations: New York , New Jersey, California
Tax-exempt income and relative safety are on sale for investors who are sniffing around municipal bonds. Tax-exempt income Interest income from municipal bonds is exempt from federal income tax — and can avoid state and local levies, too, if an investor and the bond issuer are in the same jurisdiction. This feature makes munis especially attractive to high-income investors in the 32% marginal federal income tax bracket and higher. Investors weighing a tax-exempt municipal bond against a corporate bond would do well to check out the tax equivalent yield. Schwab's Howard noted that the 5- to 7-year part of the municipal bond curve is favorable.
Persons: MUB, Nathan Will, Will, it's, Cooper Howard, Schwab's Howard, Shannon Saccocia Organizations: Federal Reserve, Muni Bond ETF, Vanguard, AAA, Bond, ., New York Life Investments, Schwab Center, Financial Research Locations: munis, muni
Local municipal general obligation bonds help fund operations or specific projects. Right now, yields for local general obligation munis are historically attractive at about 3.7%, said Cooper Howard, fixed income strategist for the Schwab Center for Financial Research. In general, the credit quality of local general obligation munis are pretty solid, said Richard Schwam, a municipal credit research analyst at AllianceBernstein. "There are so many general obligation bonds in the country that you can stay away from anything too tiny. Weinberg also recommended diversifying with multiple states, but cautioned that buying a bond outside of your state means you'll likely be subject to state income tax.
Persons: It's, Cooper Howard, Howard, Richard Schwam, Schwam, Schwab's Howard, bode, Ian Weinberg, Weinberg Organizations: Schwab Center, Financial Research, AAA, San, Family Wealth, Pension Management, Schwab's Municipal, Bond Locations: California, New York, San Francisco
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