RT Journal Article SR Electronic T1 The Time-Varying Interest Rate Sensitivity of Municipal Bonds JF The Journal of Wealth Management FD Institutional Investor Journals SP 47 OP 54 DO 10.3905/jwm.2015.18.2.047 VO 18 IS 2 A1 Haim A. Mozes YR 2015 UL https://pm-research.com/content/18/2/47.abstract AB This article demonstrates that municipal bonds’ interest rate sensitivity is a function of how inexpensive municipal bonds are relative to Treasury bonds. The difference between municipal bond yields and Treasury bond yields is used to measure their relative cost. Key results are that 1) the less expensive municipal bonds are relative to Treasury bonds, the lower the interest rate sensitivity of municipal bonds; and 2) after controlling for the level of municipal bond yields, the cheaper municipal bonds are relative to Treasury bonds, the higher the return on municipal bonds. These results have important implications for investors seeking to hedge the interest rate risk of municipal bonds or to evaluate municipal bond investment opportunities.TOPICS: Fixed income and structured finance, performance measurement, risk management