Markets & Economy


What's driving munis? Detroit, tapering, and interest rates

October 10, 2013

An episode from Vanguard's Investment Commentary podcast series

Chris AlwineChris Alwine, head of Vanguard municipal bond operations, shares the firm's outlook for the municipal bond market including Detroit's bankruptcy, volatility in Puerto Rico, and uncertainty surrounding the Fed's plans to taper its $85 billion-a-month bond-buying program. He also discusses what investors and their advisors should consider when investing in this unusually volatile muni bond environment.


  • All investing is subject to risk, including the possible loss of the money you invest.
  • Bond funds are subject to interest rate, credit, and inflation risk. Although the income from a municipal bond fund is exempt from federal tax, you may owe taxes on any capital gains realized through the fund's trading or through your own redemption of shares. For some investors, a portion of the fund's income may be subject to state and local taxes, as well as to the federal Alternative Minimum Tax.
  • Diversification does not ensure a profit or protect against a loss.