Once the domain of the rich and "widows and orphans", the municipal bond market is "guaranteed" tax-free income no more
"... Nonetheless, mutual and exchange-traded funds that invest in municipal bonds saw outflows of $4bn in the week ended Wednesday, according to Lipper, the fund tracker. The redemptions beat the previous weekly record of $3.1bn in November.
Investors have withdrawn more than $20bn from muni funds in a 10-week losing streak sparked by rising benchmark interest rates and predictions that fiscal problems around the US could result in a spate of local defaults as soon as this year.
Muni market experts have repeatedly urged calm, pointing to a history dating back to the 1930s when states and cities have honoured their debts in spite of economic ups and downs..."