Municipal Bonds Could Be Double Topping, Despite Fed Intervention
Chris Kimble | Sep 01, 2020 11:03AM ET
In March, after a 15% decline in municipal bond prices and as part of its response to COVID-19, the it would, for the first time in its history, enter the municipal bond market.
Following the announcement of the Feds purchasing plans, municipal bonds experienced a very strong rally, taking them back to the highs seen earlier this year.
This chart looks at National Muni Bond ETF (NYSE:MUB) on a weekly basis.
The rally off the March lows came back to test the highs of earlier this year, where MUB may have created a double top at (1).
Weakness in MUB of late has it breaking below support at (2).
If MUB has double topped, it could well be suggesting that the long-term bull market in bonds could be coming to an end, despite the Fed pumping historical amounts into this market.
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