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The Muni Market Turmoil Continues: What's Going on and How to Respond

by Annette Thau

The Muni Market Turmoil Continues: What's Going On And How To Respond Splash image

There have been a number of very bad years in the municipal bond market. But 2008 is in a league of its own—without any doubt, the worst year ever in the municipal bond market.

Last April, I wrote an article about steep declines in the muni market during the second half of February 2008 [“Turmoil in the Marketplace: What’s Going on With Munis?,” May 2008 AAII Journal; available at AAII.com]. The market subsequently rallied somewhat, but remained depressed.

A much steeper decline began in September, and as I write this (the second week of December), there is no end in sight. The declines taking place are unprecedented: particularly for bonds with long maturities and/or weaker credit quality.

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