We look at municipal exchange traded funds (ETFs), a growing factor in the muni investment world.

The municipal market narrative of the past three months has focused on the sharp increase in new issue supply. Following the December 2017 passage of the Tax Cuts and Jobs Act, which ended the use of tax free bonds to advance refund outstanding debt, primary volume slowed as refunding totals fell from 2017’s $153 billion to $59.4 billion last year, the slowest pace for refundings since Y2K, aka 2000. Interest rates, which were on the rise during most of last year, peaked in November 2018 (10- year Treasury yield 3.24% on 11-8-18) before dropping by 178 bps in the first nine months of this year.

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