The stampede into muniland
The stampede into municipal bonds has been strong since the market hit a low point after Meredith Whitney’s famous prediction in 2010 of hundreds of billions of dollars in defaults. Her words caused a run out of muniland, which damaged a lot of retail investors who sold their holdings at market lows.
The rebound in demand since then has pushed down yields to near historic lows, as investors stampeded back into muniland in a search of security and returns. This excellent chart of yields for AAA general obligation bonds from Daniel Berger at Thomson Reuters Municipal Market Data is worth a thousand words.
Bloomberg writes, “State-Local Government in Best of Times for Finance: Muni Credit”