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Bloomberg
The largest underwriter in the $3.9 trillion municipal-bond market says the rally is about to face a crucial hurdle.
Bank of America Corp. (BofA) analysts Yingchen Li and Ian Rogow said they’re watching to see what happens if 10-year benchmark yields hit 0.5% — a threshold that may mark a test of whether investors continue stampeding into the market.
Such pricing milestones are often watched in other markets, from stocks to mortgages, as a sort of psychological test of whether investors will shift gear if prices seem to heady or payouts too low.
Prices in the state and local government bond market have rebounded sharply since March as investors poured billions of dollars back into mutual funds, sending yields tumbling to the lowest in decades.