Tags: Municipal | Debt | Households | Decline

Municipal Debt Held by Households Declined in Quarter

Thursday, 09 Dec 2010 03:38 PM

U.S. households’ municipal-debt holdings fell a half percent in the third quarter, the first decline in two years, as the recovering economy boosted the allure of stocks.

State and local government debt owned by households, the largest investor group, fell $5.7 billion to $1.06 trillion in the three months ended Sept. 30 from the previous quarter, data released today by the Federal Reserve said. It’s the first decline since the third quarter of 2008. Holdings were 7.7 percent higher than in the third quarter of 2009, the Fed said.

Record-low tax-exempt yields and a 10.7 percent jump in the Standard & Poor’s 500 stock index in the quarter may have prompted households to shift funds, said Howard Cure, director of municipal research for Evercore Wealth Management LLC in New York.

“It could just be people sensing the economy picking up, making them less risk-adverse and switching from bonds to equities,” he said.

The total municipal-bond market, including short- and long- term debt that states and local governments sold for their own purposes or for nonprofit, expanded by half a percent to $2.86 trillion during the third quarter from the second, the Fed data show. The market was 3 percent larger than in the same period last year, it said.

International holdings rose 1 percent in the quarter to $52 billion, the Fed data show. The amount is up 4 percent from a year earlier.

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U.S. households municipal-debt holdings fell a half percent in the third quarter, the first decline in two years, as the recovering economy boosted the allure of stocks. State and local government debt owned by households, the largest investor group, fell $5.7 billion to...
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Thursday, 09 Dec 2010 03:38 PM
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