How often has the ratio curve been this flat from 12 to 30 years?  We don't know yet, but we will know soon!  A flat ratio curve says something very interesting about how risk is being assessed through time.  Traditionally, ratios will rise as you move out the curve.  The ratio of SIFMA to LIBOR is normally very low - 65% to 75% or so.  We have seen the 30-year ratio at well over 100%.

Muni and Treasury Yield Curves

Excerpt from Municipal Strategy Report - May 2012 ›

Personal income declined from the end of the second quarter to the end of the third quarter.  While this may raise fears over the health of the economy, it is not without precedent for personal income to decline while the economy as a whole grows.  

Growth in Real Gross Domestic Product Compared to Growth in Personal Income (%)

Though a decline in personal income does not necessarily presage a recession, in the long run growth of GDP requires growth of personal income.  This makes sense, as a decline in personal income should decrease consumption, which is a large percentage of GDP.

Excerpt from Quarterly Forecast Q4 2011 ›

The Data Diffusion Chart shows that the gap between the Treasury 10-year yield and the Index is narrowing, indicating that the market has returned to trading based a little more on fundamentals rather than flight to quality concerns.

Data Diffusion Index vs. 10-year Treasury Yield

Excerpt from Municipal Strategy Report - November 2011 ›

The relative advantage of fixed income stocks to munis is shrinking.  Some of this is clearly compression due to the low level of interest rates.  Our outlook, though, is for dividend yields to increase.

Munis Losing a Little Mojo?

Excerpt from Municipal Strategy Report - November 2011 ›

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