Weekly Review: Municipal Bond CEFs - PCQ Announced Unchanged Dividend

Introduction
Over the past few months, most of you have noticed our increased activity in closed-end funds as the inflow of volatility finally shook them up and created various arbitrage, and directional, opportunities for active traders like us.
Currently, we are cautious when we choose our long positions as most of the closed-end funds which hold municipal bonds have lost their statistical edge and are traded at positive Z-scores. However, there are several interesting pair trade opportunities which can be traded. For the conservative market participants with longer investment horizon, I still see interesting dividend opportunities which are traded at high discounts.
The Benchmark
Although the past week was positive for the stock market and the riskier assets, we did not see an abandonment from the safer asset classes such as municipal bonds. Some of the market participants continued to prefer the safer side of the coin after the bad jobs report. On Friday, after the U.S. government said the economy added far fewer jobs than expected during the month of May, the 10-year Treasury yield dropped below 2.06% which is its lowest level since September 2017.

Source: CNBC.com, US 10-Year yields
On a weekly basis, the main index iShares National AMT-Free Muni Bond ETF (MUB) increased its price by $0.01 and finished the Friday session at $112.88 per share. It is important to mention that the ex-dividend date of the main index was on Monday and it distributed a... Read more