That is perhaps only relevant if you plan on selling them. I have no such plans. For me they are an ever accruing "money hose" I can turn off or on as needed...
I don't know. Have we averaged greater than 3.5 to 4.0 percent inflation recently? Those are the current returns from my munies, not counting the tax exemption...
You are likely confusing yield with coupon. The current yield of munis are below inflation. However their coupon rates are determined at time of issue so bonds issued a while ago tend to have coupon rates above inflation. What this means is one can sell these bonds now significantly above face value (and possibly incur capital gain tax). What it also means is that new investors in today's bonds will get below inflation return. This last point is what matters and is what people mean when they say that bonds have negative real yield.
Right. It’s a surprisingly common fallacy that holding to maturity somehow makes one whole despite rising inflation.
One way to expose the fallacy is perhaps by the thought experiment of selling on the secondary market a day or a week before maturity. Prices of any highly liquid bond will have converged toward redemption value, differing by no more than some small epsilon.
