The Municipal Securities Rulemaking Board (MSRB) has just released its 2022 Year-in-Review report, which reveals significant changes in the municipal bond market when compared to 2021 and prior years. Key findings include:
- Trading volume in municipal bonds soared, surpassing the previous record set in 2008 by 17% and up 66% from 2021.
- Individual investors flooded back into the market as interest rates rose, buying individual bonds and contributing to the dramatic increase in trading volume.
- Tax-exempt yields rose 160-260 basis points for the year, as inflation fears and Fed tightening drove rates in all fixed income securities higher.
- New issuance volume declined to the lowest level since 2018, with taxable and refunding deals down 57% and 65%, respectively, as higher rates made these deals less attractive to issuers.
- Tax-exempt mutual funds saw unprecedented outflows as interest rates rose, with approximately $144 billion in outflows, far outpacing outflows in the only other two years the market saw outflows from tax-exempt mutual funds.
- The market saw record inflows into tax-exempt ETFs, helping offset in part the dramatic outflows from tax-exempt mutual funds.
Read the report to learn more.