Muni bonds collapsing! What it means …

Martin and Mike here with a quick update on the muni bond market …

The big picture in a nutshell?

Just as we warned, their prices are collapsing, driving interest rates sharply higher.

U.S. Treasury bonds, corporate bonds, and mortgage-backed bonds are following a similar pattern.

And as a result, most portfolios loaded with fixed instruments — held by individuals, banks, insurance companies, or others — are now suffering.

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The implications? Far reaching!

First and foremost, this decline reflects an accelerating exodus out of bonds of all stripes and colors.

And second, it also seems to be correlated with a comparable RISE in the Dow, as investors switch into stocks.

Can this pattern continue for a while? Of course!

But don’t expect it to last forever; higher rates are ultimately a competitive threat to investments that do not offer good yields.

Plus, let’s not ignore some of the reasons WHY bond prices are falling, including …

• Falling confidence in governments and their ability to manage their finances.

• Growing fears of inflation as the trillions of dollars printed by the Fed begin to find their way into the economy.

• Plus, widespread impatience — and even disgust — among millions of fixed-income investors who feel they deserve a lot more than the miserable yields they’ve been getting on their money.

Bottom line for you: Get out of bonds — while you still can at relatively good prices.

Then seriously consider the many other good investment ideas and strategies we’ve covered here in Money and Markets this week …

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EDITOR’S PICKS Bond market meltdown hitting rate-sensitive stocks, ETFs — Here’s what to do! by Mike Larson Since I started closely following the financial markets more than 16 years ago, I have seen several major interest rate cycles. Have a bank pay for your next vacation … by Nilus Mattive Last week I said there were a lot of simple ways to live a richer lifestyle, including plenty that don’t require investing money. The Markets Take No Prisoners … by Larry Edelson It was just about this time last year, in my columns in Uncommon Wisdom, that I started warning … That we’d see a short-term rally in the dollar, mainly against the euro. That Europe would kick the sovereign debt can down the road.

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