US Municipal bond market recap and outlook

The municipal bond market advanced during the third quarter, recovering from its COVID-19 induced selloff in March, adding to its year to date gains. Favorable market technicals—including strong demand, especially for taxable municipals—pushed up prices. The rebound in municipal bond prices suggested that the investment climate might have shifted in favor of credit focused investors. US federal stimulus continued to support the municipal market during the quarter but the delay of a rescue package for state and local credits dampened sentiment.