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As a 10-year-old, I lived for the Colorado State Fair and all the treats that filled the boardwalk. Funnel cakes and nachos were among my favorites. And, to be honest, how do you pass up the soft-serve ice cream? That summer, though, I had a different mission: Conquer The Ring of Fire. The upside-down roller-coaster that terrified and captivated me for as long as I could remember.
The outcome? Less triumphant. Most of the carnival food made a dramatic and unfortunate exit (details best left to the imagination). Like any 10-year-old, I rallied quickly. I didn’t view the experience as a disaster, but as an opportunity to replenish what I lost with another funnel cake. This time with extra powdered sugar.
The Ring of Fire was the wildest ride I’d experienced — until “Liberation Day” on April 2 sent fixed income markets into a tailspin.
The market volatility drove municipal yields to levels we haven’t seen since the Global Financial Crisis. Just like a heavily sugared funnel cake after a terrifying roller-coaster, yields at these levels present real opportunities for investors. The chart below shows four previous entry points into the municipal market with roughly comparable yields to the current market’s. The table following the chart shows the subsequent five-year annualized returns following each of those entry points.
