A recent research report by Merrill Lynch & Co. concludes that a soaring federal deficit and the tax hikes that may be necessary to combat it could make municipal bonds more attractive to investors in the coming years. But some market participants contend there are too many variable factors to be able to draw such a conclusion.
"For muni investors, the point is clear. The relative value of munis could rise substantially in future years," according to the Merrill research report, which was released yesterday. While the final outcome of the presidential election will have to wait for a few more months, the firm said it anticipates that taxes will rise "substantially" in the coming years, regardless of who is elected.