![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjAHxBjGN6tDNXCEQ35mowO1UNlpwFg9HAEWDGYL9Pwi6_8u39KFwSb9vVZN4sEFbDplVA8sl88m1P4oDzVU-Hbx4lfalRUUecAZSYNekxIwQ_B3gEEqgqA9n4PuMjAaWVtUtR83b5zAKhO/s1600/fredgraph-2.png) |
Via FRED, the Bond Buyer Index GO 20y to maturity, mixed quality) spread to treasuries (weekly) |
I've made no secret that I have been a heavy buyer of long-term municipal credit risk, taxable and non (via Build America Bonds) with short in treasuries of similar maturity to isolate the spread, looking for compression. But, please, take a look at the big 2008 spike. At these levels DV01s are big, so that widening can be really painful. Do yourself a favor and watch your risk levels. While there's
reasons (scroll down to TOB section if you must) why I, personally, don't expect a 2008-like event, I am ready for it. This goes double if you think you are going to boost your positive carry and grab extra return from a wide discount in CEFs, as illustrated below.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhdrFLtCNkz6FeloGpDhHaj56dzUM233dpuTZtnuLwBKAqjNpA117jWKe_xsomeRpe4m2dSMJtDyHRtjpV7pe8Vg5FtYdiWU185GaGMM5ofn0fzkn5yGY0wX37yagfTHgfLWCfc1PtfzkKU/s1600/16575253717_Nb9jf.jpg) |
XBBNX is NAV of BBN |
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhut7gpqNjb5AOZ1hSY79kYMv6J26cDbcFYc5ruz4nV8Jy2elJ_kDMv85SW1GxJ437oyiXkdfS-G37YukM-3-76fJ_11hcjYN2MtjBbEfd552PnUKsNe7H5Fua1arkhIomraTLSXIDQVckz/s640/Charter.aspx.png) |
Discount / premium of MQT via CEF Connect |
UPDATE-1: Going back to 1953 using the monthly 20y treasury series with the long-term average series for the gap (pretty good fit, actually)
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