The municipal bond market's 10-month winning streak finally came to an end in September with the S&P Muni Bond Index declining 65 bps in the month. The main driver of that was the small increase in long rates, slightly higher inflation readings, and underperformance compared to treasury bonds.
We also saw the technical backdrop reverse a bit with the rally stalling amid a sharp increase in new muni issuance while demand waned a bit. Still, net flows remain strongly positive.
The fourth quarter is typically a weaker time of year for munis as issuance picks