Strategist: Tax-Exempt Bonds Could Continue Rally

Data suggests that tax-exempt bonds may continue to rally from current, historic high prices and low yields. But why?

First, consider where corporations are able to borrow money and at what yield investors are anxious to lend. On Monday, IBM sold $1.5 billion in three-year debt at a record low of 1 percent or just 30 basis points over treasuries.

Second, IBM is not the only company rushing to market. Monday was the sixth busiest day of the year for investment grade bond sales, including issues from Citigroup, Credit Suisse and Expedia.

Third, if the Bush tax cuts expire as expected at the end of this year, tax-exempt bonds will immediately become more valuable.

But it's the yields relative to inflation that has Chris Mier, a market strategist at Loop Capital Markets, most excited.

Mier says tax-exempt bonds could continue to rally from these historic high prices/low yields.

Watch the video to see what he has to say: