By: Dr K C Gupta, YBB Personal Finance

Mini Feature SHOULD YOU BUY MUNIS?

CONTRARIAN INDICATORS

AAII Bull-Bear Spread +2.7% (below average)
CNN Fear & Greed Index 63 (greed)
NYSE %Above 50-dMA 47.74% (negative)
SP500 %Above 50-dMA 44.20% (negative)

ICI Fund Allocations (Cumulative), 3/31/26
OEFs & ETFs: Stocks 60.49%, Hybrids 4.01%, Bonds 17.98%, M-Mkt 17.53%

INTEREST RATES

Cycle peak 5.25-5.50%
Current 3.50-3.75%
FOMC 6/17/26+ hold
FOMC 7/29/26+ hold

Treasury

T-Bills 3-mo yield 3.69%, 1-yr 3.82%; T-Notes 2-yr 4.09%, 5-yr 4.26%, 10-yr 4.59%; T-Bonds 30-yr 5.12%;
TIPS/Real yields 5-yr 1.56%, 10-yr 2.10%, 30-yr 2.81%
FRNs Index 3.643%

Bank Rates www.depositaccounts.com/



Stable-Value (SV) Rates, 5/1/26
TIAA Traditional Annuity (Accumulation) Rates
Restricted RC 5.25%, RA 5.00%
Flexible RCP 4.50%, SRA 4.25%, IRA-101110+ 3.50%
TIAA MYGA 4.15% (3-yr), 4.30% (5-yr), 4.40% (7-yr) (NEW)
TSP G Fund 4.50% (previous 4.375%)

India Fear & Greed MMI 57.01 (greed)
Weekly ETFs: INDA -3.71%, INDY -3.00%, EPI -3.68%, INDH -2.09% | SPY +0.21%

The data above are as of Sunday preceding the publication date.

PHARMA. Japanese KM Biologics (a unit of Meiji Seika Pharma Co) will have technical collaboration with Serum Institute of India to initially develop & produce Japanese encephalitis vaccine. The collaboration may be expanded in future.

SPACE TECHNOLOGY

ORBITAL DATACENTERS are the latest developments that combine space & AI/datacenter technologies. Satellites in SSO (sun-synchronous orbit) & LEO (low-earth-orbit) orbits are used. There are high costs associated with satellite launches, datacenter equipment & data transmission networks.
Datacenters are power hogs, but in space, they can tap unlimited solar power. With lot of computing done on board, the load on data transmission systems is reduced. But equipment servicing poses challenges.
Several companies are involved in the related developments: Amazon/AMZN, Blue Origin, Google/GOOGL, Nvidia/NVDA, OpenAI, Pixxel (India-US), Sarvam (India), SpaceX, Starcloud & several startups.
A notable Indian effort is the partnership between Pixxel (for satellites) & Sarvam (for AI infrastructure). Space is the next frontier critical for defense, science & technology. India cannot afford to wait & depend on technology transfer later.

SPECIAL TOPIC – SHOULD YOU BUY MUNIS?

Munis are a small segment of the bond market. It’s a market dominated by retail investors.

Munis are attractive for high income investors. The muni income is exempt from federal taxes. In addition, state/local munis are exempt from state/local taxes. There are state muni funds for high tax states. States typically disallow exemptions for national muni funds unless they have high % of income from that state munis.

Some munis such as from Puerto Rico (PR) are exempt from all state/local taxes. That’s why PR bonds are found in many national & state muni funds.

Equivalent Taxable Yield = Muni Yield/(1 – f – s), where f is the federal tax rate in fractions (e.g. for top federal tax rate 37% in 2025, f = 0.37) & s is the state tax in fractions (top CA rate is 13.3% in 2025, so s = 0.133). For high income earners in CA in 2025, the equivalent taxable yield = 1.99 x muni yield.

For investors in middle tax brackets, the decision to buy munis is based on additional factors: (i) muni interest is excluded from some MAGI calculations & that may affect some other benefits, (ii) muni prices may be more attractive than their tax-exempt features would justify, so there may be potential for capital gains (CGs), (iii) munis are less interest sensitive because foreigners aren’t interested in munis.

Brokerages & fund firms don’t allow munis in IRAs (normally, it wouldn’t make sense), but after sharp muni selloffs, some who want to buy munis or muni CEFs for CGs in IRAs must get special permissions. There are times when muni yields may be almost comparable to Treasury yields.

Munis can be government-obligations (GOs) or revenue-bonds supported by specific projects or facilities (airports, hospitals, highways, universities, special industrial or housing developments).

In order to promote industrial or housing developments in their communities, some municipalities may raise funds for use by private companies or developers by issuing revenue-bonds at lower interest rates than the companies or developers may get on their own. The municipality has minimal risks & investors may believe that such projects are more sound financially or worthy of support. This type of muni financing may come with local incentives such as tax increment financing (TIF).

Muni ETFs include SUB, ITM, MUB, VTEB;
CEFs NAD, NDMO, NEA, NVG, NZF, NMCO;
HY muni ETFs HYD, HYMB;
HY muni CEFs NMZ.

For more information, see ybbpersonalfinance.proboards.com/