Municipal Market: How Rates Rise Matters

In prior rising rate environments, various parts of the municipal yield curve reacted differently based on economic conditions and the pace and scale of Fed activity.  An analysis of historical changes in monetary policy shows that in the past three rising rate environments, a hypothetical investor who stayed the course through the tightening cycle –regardless of their position on the yield curve – may have experienced positive total returns, the notion that “rising rates are bad for bond investors” notwithstanding.