Tuesday, October 3, 2017
MANAGING DIRECTOR: Scott Carrithers   PORTFOLIO SALES AND SERVICE: Steve Panknin • George Morris • Jeff Goble • Chris Thompson • Sean Doherty Robert Brickson • Kevin Doyle • Lonnie Harris •  Mark Tranckino • Robert Schuyler  Tom Toburen • Josh Kiefer • Nicole Burczyk • Kelley Frye • Natalie Regan • Aaron Stoffer

US Treasury Market
Date	1 mo	3 mo	6 mo	1 yr	2 yr	3 yr	5 yr	7 yr	10 yr	20 yr	30 yr
9/26/17	.96	1.06	1.19	1.31	1.45	1.57	1.87	2.08	2.24	2.54	2.78
9/27/17	.99	1.07	1.20	1.33	1.47	1.60	1.91	2.14	2.31	2.62	2.86
9/28/17	.97	1.06	1.18	1.31	1.45	1.59	1.89	2.13	2.31	2.63	2.87
9/29/17	.96	1.06	1.20	1.31	1.47	1.62	1.92	2.16	2.33	2.63	2.86
10/02/17	.95	1.01	1.22	1.31	1.49	1.63	1.94	2.17	2.34	2.64	2.87

                   

Source: U.S. Department of the Treasury, as of 10/02/17

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Municipal Bonds = Tax Free Bonds

(This is for individuals, you and your customers.)

 

Generally, when we speak of “municipal bonds”, we are referring to “tax free bonds”.  Of course, some municipal bonds are “taxable bonds”.

 

In both instances we are referring to taxation at the federal level, so “tax free bonds” and “taxable bonds” would be tax free or taxable at the federal level.  We will not get into the much rarer municipal bonds that are subject to alternative minimum tax (AMT).

 

The term “double tax exempt bonds” refers to those municipal bonds that are tax free at the federal level and the state level, keeping in mind that several states (i.e. Texas and Florida) do not have state income taxes at the present time for federally tax free municipals of any state and are automatically “double exempted” to resident purchasers in those states.

 

Many customers say they want “double exempt bonds” which makes sense until, on occasion, you get into the realities of the market math.  A North Carolina resident for example, instructs us to find double exempt North Carolina bonds which seems logical to get the best net income.  But a closer look sometimes yields a different and better idea.

 

Below are three municipal issues, all Aaa* rated in quality.  In 10 years, Cary, NC came to market @ 1.90% yield, Johnson County, KS Community College came @ 2.20%, and Irving, TX came @ 2.09%

 

After 6% NC state income tax, the Johnson County, KS CCD bonds yield (net) = 2.07%, the Irving, TX bonds yield (net) = 1.96% (approximately).  Thus even to a NC taxpayer, either of the 2 NON NC bonds yield NET a higher yield than the 1.90% on the Cary, NC bonds.  *Johnson County, KS CCD actually is Aa1 rated, a smidge below Aaa (Johnson County, KS is rated Aaa).

This information is intended for institutional investors only. The material provided in this document/presentation is for informational purposes only and is intended solely for private use. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instruments.

•Not FDIC Insured •No Bank Guarantee •May Lose Value