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Municipal Bonds Could Be Double Topping, Despite Fed Intervention

By Chris KimbleBondsSep 01, 2020 11:03AM ET
www.investing.com/analysis/municipal-bonds-could-be-double-topping-despite-fed-intervention-200535988
Municipal Bonds Could Be Double Topping, Despite Fed Intervention
By Chris Kimble   |  Sep 01, 2020 11:03AM ET
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iShares Trust Municipal Bond ETF – I-Week Chart.
iShares Trust Municipal Bond ETF – I-Week Chart.

In March, after a 15% decline in municipal bond prices and as part of its response to COVID-19, the Federal Reserve announced it would, for the first time in its history, enter the municipal bond market.

Following the announcement of the Feds purchasing plans, municipal bonds experienced a very strong rally, taking them back to the highs seen earlier this year.

This chart looks at National Muni Bond ETF (NYSE:MUB) on a weekly basis.

The rally off the March lows came back to test the highs of earlier this year, where MUB may have created a double top at (1).

Weakness in MUB of late has it breaking below support at (2).

If MUB has double topped, it could well be suggesting that the long-term bull market in bonds could be coming to an end, despite the Fed pumping historical amounts into this market.

Municipal Bonds Could Be Double Topping, Despite Fed Intervention
 

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Municipal Bonds Could Be Double Topping, Despite Fed Intervention

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Matt Cavagrotti
Matt Cavagrotti Sep 02, 2020 9:16AM ET
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Thanks, Chris. In your view, what are the implications for the rest of the market if this comes to pass?
 
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