License to Yield: Municipal Bonds Offer a GoldenEye Opportunity

The World Is Not Enough (But These Bonds Might Be)

Moneypenny darling have you seen my Walther PPK? And more importantly have you checked the municipal bond market lately? Seems those tariff tantrums earlier this year created quite the buying opportunity. Strategists at Bank of America bless their analytical hearts suggest the time to add duration exposure is nigh. It appears this rally has legs – long lovely legs much like those of a Bond girl chasing me across a casino floor.

For Your Eyes Only: The Tax Free Secret

These bonds you see are the darlings of the wealthy. Why? Because the income is free from federal tax and even state tax if you're clever enough to live where the bond is issued. It's like having a license to print money – without all the messy paperwork and international intrigue. The iShares National Muni Bond ETF is currently showing a 30 day SEC yield of 3.74%. Not bad eh? Time to enjoy a martini...shaken not stirred.

Die Another Day (But Buy Today)

Tom Kozlik from Hilltop Securities is practically begging investors to jump on these attractive payouts. 'You don't want to feel as though you have missed that window of opportunity… it is still open,' he cautions. 'When it shuts it could shut pretty quickly.' He's right of course. Opportunities like this don't hang around longer than a villain's monologue before the inevitable explosion. Time to get your skates on 00 Section!

The Spy Who Loved Yields

Even if those pesky tariffs rear their ugly heads again Bank of America's Li doesn't expect yields to reach peak levels. Why? Because the economic outlook is shifting faster than I can change disguises. Service data is slowing which could mean better Treasury rates giving the muni market a much needed boost. 'We believe such a time is around the corner; either it's here already or near,' Li wrote. Sounds like Q Branch has been working overtime.

Quantum of Solace (In a Bond Portfolio)

BlackRock is also bullish seeing the current market as a buying opportunity. Apparently macroeconomic uncertainty has made valuations rather attractive. Plus those concerns about tax exemptions? Put to bed faster than a double agent at a diplomatic reception. Supply demand dynamics are expected to shift which could mean strong seasonal performance. It's all lining up rather nicely wouldn't you say?

Goldfinger's Guide to Bond Selection

Now it's not all smooth sailing. Kozlik warns about being selective as the Covid funding gravy train is coming to an end. Local governments will need to ensure their revenues cover their expenses. BlackRock favors essential service airport prepaid gas housing bonds and select state and local government bonds. They suggest a barbell strategy – front end exposure paired with the 20 year part of the yield curve. Bank of America agrees favoring A and BBB rated munis. Always pays to be discerning wouldn't you agree?