The municipal bond market continues its march to normalcy.
The court’s decision comes as the $2.6 trillion municipal-bond market and other fixed-income markets begin to recover from the credit crunch. The Federal Reserve’s actions to shore up liquidity and revive banks’ functioning have lessened fears of a systemic financial collapse.
Investors fled from the muni market in the early part of the year as concerns grew about muni-bond insurers with subprime-mortgage-debt exposure. In addition, the muni-bond market was hurt after the auction-rate securities market seized up, depriving many municipalities of a principal source of funding.
The average yield on a high-quality 30-year municipal bond has declined 0.7 percentage points, after reaching a peak Feb. 29 when a wave of hedge-fund selling depressed prices