Municipal Bond Update
In 2010, prominent industry analysts warned of a looming fiscal crisis among state and local governments. Some experts even predicted widespread municipal bond defaults in the US. Investor fears intensified in late 2010 when the municipal bond market experienced one of its largest selloffs in decades, which drove up bond yields. While factors unrelated to credit concerns may have contributed to the selloff, some investors were motivated by a perception of rising credit risk among municipal bond issues.