Rush to Invest in Municipal Debt Pushes Yields to Record Lows

Municipal-bond yields are hitting 38-year lows due to investors’ coronavirus concerns driving up demand in the $4 trillion muni market.

Fears of the coronavirus’s impact on global markets led to a stock selloff on Monday and Tuesday. Investors flocked to munis and other fixed-income investments for stability. The S&P Municipal Bond Index Monday logged its biggest one-day gain in 20 months. A daily gain that big—about one-third of a percentage point—has occurred only five times in the past three years.

“Fear is present and investors are taking some risk off the table,” said Sylvia Yeh, co-head of municipal fixed income at Goldman Sachs Asset Management. “That de-risking could mean [they buy into] cash, Treasurys or munis.”