MSRB Reports Tax-Exempt Market Underperformance vs. U.S. Treasuries
What happened
The Municipal Securities Rulemaking Board reported that the tax-exempt market has underperformed U.S. Treasuries. High levels of bid wanteds, driven by tax-loss harvesting and outflows from open-end mutual funds, have been noted, with September seeing 16 days with bids over $2 billion, compared to eight days in April 2025. Analysts expect extreme volatility in the U.S. Treasury market to subside as Election Day approaches.
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Why it matters
The MSRB report indicated that heavy selling and bid wanted activity in September contributed to the tax-exempt market underperforming U.S. Treasuries. If stability emerges in the U.S. Treasury market, it could lead to stability in the municipal market, potentially causing yield demand to snap yields lower.
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Who's involved
- U.S. TreasuryThe subject of the volatility and market performance reported by the MSRB.
- Bureau of the Fiscal ServiceOperates as a formal division within the larger structure of the U.S. Treasury.
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The entities involved
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U.S. Treasury
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