Rate this article

Uneven Media Coverage Mars Q3 Muni Market

The sleepy giant of a market that awoke with a start at the end of June loomed large in the minds of investors throughout the third quarter of 2013, many of whom longed for the price stability of quieter times.

Investors who were glued to financial news cable stations heard a lot about the muni market, most of it negative and/or inaccurate in our opinion.  It’s understandable that a steady diet of this type of news coverage would undermine investor confidence and fuel a sell-off.  Even for investors who focus on maximizing their yield-driven total return over the long term – as we do – third-quarter market conditions were bumpy and decidedly challenging.

Contributing factors included news about  Detroit’s bankruptcy filing, new concerns (without merit, if you ask us) about Puerto Rico’s creditworthiness, uncertainty about when and how the arbitration panel tasked with resolving a “tobacco bonds” dispute would rule and ongoing speculation about what the Federal Reserve might do next.

Had the news coverage been more even-handed, perhaps muni bond prices wouldn’t have been so pressured.  There were, after all, opportunities for higher levels of tax-free income in the third quarter—but that news was largely overlooked.         

View PDF

RW2746.004.1013

Fixed income investing entails credit and interest rate risks. When interest rates rise, bond prices fall and a fund’s share price can fall. Municipal bonds are subject to default on income and principal payments. Further, a portion of some funds’ distributions may be taxable and may increase alternative minimum tax (AMT) for investors subject to that tax; distributions from net realized capital gains are taxable as capital gains.
Shares of Oppenheimer funds are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including the possible loss of the principal amount invested.

Shares of Oppenheimer funds are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including the possible loss of the principal amount invested.

Before investing in any of the Oppenheimer funds, investors should carefully consider a fund's investment objectives, risks, charges and expenses. Fund prospectuses and summary prospectuses contain this and other information about the funds, and may be obtained by asking your financial advisor, visiting oppenheimerfunds.com, or calling 1.800.CALL OPP (225.5677). Read prospectuses and summary prospectuses carefully before investing.

Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc.
Two World Financial Center, 225 Liberty Street, New York, NY 10281-1008