{"id":75150,"date":"2023-10-21T04:25:29","date_gmt":"2023-10-21T08:25:29","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/harnessing-the-inverted-municipal-yield-curve\/"},"modified":"2023-10-21T04:25:34","modified_gmt":"2023-10-21T08:25:34","slug":"harnessing-the-inverted-municipal-yield-curve","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=75150","title":{"rendered":"Harnessing The Inverted Municipal Yield Curve"},"content":{"rendered":"<div data-test-id=\"content-container\">\n<p><figure class=\"getty-figure\" data-type=\"getty-image\"><picture>  <\/picture><figcaption> <\/figcaption><\/figure>\n<\/p>\n<p><strong>A Barbell Maturity Structure Can Capture High Front- and Back-End Yields<\/strong><\/p>\n<p><figure class=\"regular-img-figure paywall-full-content invisible\" contenteditable=\"false\"><picture> <img decoding=\"async\" src=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/10\/Annotated_Harnessing-the-Inverted-Municipal-Yield-Curve_dipslay-1_d8.svg.svg+xml\" alt=\"A line chart, the yield curve, shows that intermediate term bond yields are well below short- and longer-term issues.\" contenteditable=\"false\" loading=\"lazy\"> <\/picture><figcaption>\n<p class=\"item-caption\">Historical and current analyses do not guarantee future results. For illustrative purposes only. *Hypothetical portfolio based on Bloomberg Municipal Indices. Barbell is 40% weighted in one- and three-year indices and 60% in<span class=\"paywall-full-content invisible\"> 15- and 20-year indices. Concentrated holds 100% in the 10-Year Municipal Index. Ladder comprises equal weights of 12.5% in the one-year through 22-year municipal indices. As of September 30, 2023 <\/span><span class=\"paywall-full-content invisible\">(Source: Bloomberg, Municipal Market Data and AllianceBernstein)<\/span><\/p>\n<\/figcaption><\/figure>\n<\/p>\n<p class=\"paywall-full-content invisible\">The muni yield curve has been inverted before, but not for any meaningful length of time &#8211; until now. With yields on short-term muni bonds still significantly higher than those on intermediate-term munis, what\u2019s an investor to do?<\/p>\n<p class=\"paywall-full-content invisible\">In this environment, it\u2019s possible not only to potentially increase yield, but provide higher return potential by investing along the<span class=\"paywall-full-content no-summary-bullets invisible\"> short <\/span><em class=\"paywall-full-content no-summary-bullets invisible\">and <\/em><span class=\"paywall-full-content no-summary-bullets invisible\">long ends of the yield curve.<\/span><\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Known as a barbell maturity structure, this approach selectively invests in short- and longer-term muni bonds, while minimizing exposure to the middle of the curve.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">So far this year, a barbell has cushioned muni losses more than concentrated and ladder structures have, while providing a higher yield\u2014and with the same average duration!<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Since bond prices rise when rates fall, total return potential also improves when the yield curve shifts back to normal and yields for short munis fall relative to other bonds, while intermediates rise, and long bonds fall or remain flat.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Of course, conditions may change, making a different maturity structure more attractive down the road. Municipal bond investors should remain flexible to take advantage of changing opportunities in a shifting landscape.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\"><strong>The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams. Views are subject to revision over time. <\/strong><\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\"><em>Original Post<\/em><\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\"><strong>Editor&#8217;s Note:<\/strong> The summary bullets for this article were chosen by Seeking Alpha editors.<\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/seekingalpha.com\/article\/4642352-harnessing-the-inverted-municipal-yield-curve?source=feed_all_articles\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A Barbell Maturity Structure Can Capture High Front- and Back-End Yields Historical and current analyses do not guarantee future results. For illustrative purposes only. *Hypothetical portfolio based on Bloomberg Municipal Indices. Barbell is 40% weighted in one- and three-year indices and 60% in 15- and 20-year indices. Concentrated holds 100% in the 10-Year Municipal Index. [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":75151,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[236],"tags":[83],"class_list":["post-75150","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-news","tag-featured","post_format-post-format-gallery"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Harnessing The Inverted Municipal Yield Curve | iFintechWorld<\/title>\n<meta name=\"description\" content=\"A Barbell Maturity Structure Can Capture High Front- and Back-End Yields Historical and current analyses do not guarantee future results. 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