The municipal bond market is generally a placid place. That has been changing lately as widespread discussions of state or local defaults have spooked investors into pulling back from these tax-exempt bonds and bond funds. The initial wave of selling seems to be abating as this piece suggests [emphasis added]:
Municipal bonds are trending higher today, according to our colleagues at Dow Jones, despite weakness in the Treasury markets. The addled market has slowly recovered in recent days as fear of widespread defaults has diminished, but certainly not disappeared.…The iShares S&P National AMT-Free Muni Bond ETF has risen to 99.50 from a low of 96.26 reached on Jan. 14. It is still well off the 105 level it traded at before the muni bond fears ratcheted higher in the wake of analyst Meredith Whitney’s dire prediction of widespread defaults. On the negative side of the ledger, Illinois has delayed its $3.7 billion bond issue that would fund its pension obligations. Originally slated for this week, it is now expected for next week…Also, today’s gains are focused on higher-quality bonds, according to MMD. Investors remain chary about risks associated with lower-rated muni bonds.
MMD as referenced above is Thomson’s Municipal Market Data service, I believe.
Disclosure: No positions