Story perspectives

Municipal Bonds Surge Amid Falling Yields and Strong Demand

9/5/2025

26 6

Summary

Story summary

The bond market firmed as municipal and U.S. Treasury yields fell, while equities increased.
Muni issuance rose to $386.689 billion, a 14.9% increase from 2024, raising sustainability concerns.
Strong retail demand persists, especially in the short end of the muni curve, which is steeper than the UST curve.
ETFs are driving market volatility, impacting municipal bond prices significantly.
Despite challenges, municipal default rates are projected to remain low, with $672.3 million flowing into bond mutual funds last week.

1 of 1

Story summary

The bond market firmed as municipal and U.S. Treasury yields fell, while equities increased.
Muni issuance rose to $386.689 billion, a 14.9% increase from 2024, raising sustainability concerns.
Strong retail demand persists, especially in the short end of the muni curve, which is steeper than the UST curve.
ETFs are driving market volatility, impacting municipal bond prices significantly.
Despite challenges, municipal default rates are projected to remain low, with $672.3 million flowing into bond mutual funds last week.