David Blair, a veteran bond portfolio manager with First Eagle Investments, says tax-free municipal bonds are a great deal right now. He sees “incredible value” in the tax-exempt space, and he wants investors to act before the window closes.
“Incredible value.”
Blair’s assessment comes at a moment when the relationship between yields on municipal bonds and fully taxable bonds has changed dramatically. Two months ago, the situation looked different. Now, the numbers favor the tax-free side.
The Yield Comparison
The core of Blair’s argument is simple: the relationship between tax-free municipal yields and fully taxable bond yields has shifted recently. For income-focused investors, that change in direction matters.
The comparison matters because taxable income is taxed at ordinary rates, while municipal bond interest is exempt from federal income tax. That means a lower stated yield can still produce more take-home income than a higher taxable yield.
What Blair is saying is that the math has shifted in favor of tax-free bonds. Investors who were once priced out of the municipal market may now find it cheaper to buy than they expected.
Why Now Is Different
Blair’s timing is specific. He suggests the current sweet spot could last through November. After that, the dynamics could change again.
That window matters for anyone thinking about buying. Waiting too long could mean missing the best entry point of the year.
The key question is whether the trend continues. Blair’s view is that the good times may last a little while longer, but he offers no guarantee beyond November.
What This Means for Buyers
For individual investors, the takeaway is straightforward. If you need income and live in a state with high taxes, the math on municipal bonds looks better today than it did two months ago.
The practical steps are familiar:
- Check your state’s tax treatment of municipal bonds, since some states tax them and others don’t.
- Consider the credit quality and maturity of the municipal bond against your goals.
The Risk of Missing the Window
The warning in Blair’s message is that the sweet spot won’t last forever. November is the outer bound of his forecast.
That creates a sense of urgency for investors who have been on the fence. A bond buyer who waits too long risks seeing the spread narrow again, which would reduce the relative advantage of tax-free income.
Who Is David Blair
Blair is a veteran bond portfolio manager with First Eagle Investments. His experience in the field lends weight to his assessment.
His view that municipal bonds offer “incredible value” right now is notable precisely because it comes from someone who manages bonds professionally. A professional manager seeing value in a market is a signal that the underlying conditions may be favorable.
What Happens After November
Blair does not predict what happens after November. He only says the good times may last through that month.
That leaves open the question of what comes next. Will the spread hold? Will it widen further? Will it snap shut?
None of those questions have answers yet, and Blair does not attempt to answer them.
The Bottom Line
The bottom line is simple. If you want income and you live in a state that taxes it heavily, now is a good moment to look at tax-free municipal bonds.
Blair’s assessment points to a specific opportunity, but it also carries a warning: get in before the window closes. November is the deadline he has set, and the market does not wait for anyone.
Investors who act on this advice will be betting that the current yield relationship holds. Those who wait will be betting that it doesn’t.
Source material: “Tax-free bond yields are in a sweet spot. Get in before it’s too late.,” MarketWatch.
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