Banks and mutual funds increased their holdings of municipal bonds in 2020, followed by a strong increase of holdings by exchange-traded funds. Bank holdings increased to $513 billion from $472 billion from 2019, an increase of 9%. That was among several growth trends that stood out from the Federal Reserve’s flow of funds report covering the final quarter of 2020, released Thursday. “That’s consistent with a long-term trend of banks increasing their appetite for municipals and keeping more municipals on their balance sheet,” said Michael Decker, vice president of policy and research at Bond Dealers of America. “That’s the biggest part of the answer of who is buying these bonds.”
Source: The Bond Buyer
