This month, spreads reversed their downward course. The November 2010 yield on AAA-rated municipal bonds increased from 4.19% to 4.55% for 30-year bonds and from 2.59% to 3.14% for 10-year bonds. Yields on treasuries also increased from 3.91% to 4.20% for 30-year bonds and from 2.56% to 2.80% on 10-year notes, yet continued to remain below muni yields in each case. Recent Federal Reserve announcements on the state of the U.S. economy, international tensions in Korea and financial uncertainty in Ireland are working their way through the debt markets, creating a choppy trading pattern.
Source: Bloomberg (www.bloomberg.com)