Yield Curves for Every State
February 17, 2009MunicipalBonds.com has launched a first-of-its-kind Composite Yield Curves for municipal bonds. Our yield curves are simple, comprehensive, and real-time. Throughout the trading day, we take every trade that happened in a given maturity year and compute an average yield on a real-time basis. Click on one of the states below or read on:
California - New York - Florida - New Jersey - Texas
What is a Yield Curve?
A yield curve is a series of average yields from now into the future. This helps investors determine the yields they can earn in the market for a given set of maturity years in the future. For instance, the average yield for 2010 maturities can be 1.5%; the average yield for 2020 might be 4%. On a basic level, this allows investors to see that on average, allowing your money to be tied up for another 10 years will give you 2.5% more than if you were only willing to have it tied up for 1 year.
When the difference in yield between shorter maturities and longer maturities are very low, the yield curve is described as flat, flattening, or flattened. When the difference in yield between shorter maturities and longer maturities is high, the yield curve is steep, steepening, or steepened. Sometime the yield curve can also be inverted; this is when the yields on shorter maturities are higher than the yield on longer maturities.
Lots of factors determine the relationship between the yields that are available and time.
1. Interest rate risk - What are real interest rates today and what are they likely to be in the future.
2. Inflation risk - What is the risk of inflation
3. Credit risk - Is there likely to be any change in the credit quality of the issuer(s), both perceived and real.
4. Currency risk - Will the currency you are buying the bonds be devalued or increase in value or stay stable.
5. Liquidity risk - Will you be able to sell the security easily prior to maturity if you needed to.
Based on a variety of these factors, investors make determinations on what type of a premium that they need in exchange for what length of time. Our yield curves are here to help you see what is happening everyday in the municipal bond market.
So does this mean that you give equal weight to 5 BBB hospitals ‘37 & 10MM AAA Enviromentals ‘18?
Every state? I only see CA, NY, FL, NJ and TX. Where are the rest?
you can see all the trades for any state by clicking the list of the states on right.
You can view yield curves for every state by clicking on the particular state in the “Municipal Bonds by State” section of the front page and then clicking on “Yield Curve” from the state page.