The U.S. municipal market is heading for its biggest monthly rally since January 2012 as dwindling supply helps extend gains following the Federal Reserve’s decision to continue the pace of its bond buying.
The $3.7 trillion market gained 2.1 percent this month through Sept. 23, Bank of America Merrill Lynch data show.
Even though individuals have yanked money from muni mutual funds for 17 consecutive weeks, in the seven days through Sept. 18 they pulled just $1.1 billion, the smallest withdrawal since Aug. 7, Lipper US Fund Flows data show.
The $3.1 billion iShares National AMT-Free Muni Bond ETF, known as MUB, rose 29 cents to $104.28, the highest since July 19.
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Yields on benchmark munis maturing in 10 years fell 0.1 percentage point to 2.71 percent, the lowest since June 21, data compiled by Bloomberg show. It was the biggest drop in almost three months.