Municipal Bonds Weekly Roundup: February 22


February 22, 2013

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Markets were in for several volatile trading sessions this week as investors digested a slew of mixed economic reports and the minutes from the last FOMC meeting. The Fed announced that it will continue its aggressive stimulus measures, purchasing $85 billion a month of mortgage-backed and Treasury securities, as they feel the domestic economy is still too far away from standing on its own two feet. The minutes also showed that policymakers remain divided on the central bank s exit strategy, leaving many speculating whether or not the Fed will scale back or completely end its stimulus measures earlier than expected.

In the fixed income space, U.S. Treasuries took on their safe haven appeal for the first time in weeks as bond traders digested the implications of the Fed's latest policy commentary. Meanwhile, yields on 10-year municipal bonds rose to the highest level in six months on Wednesday, as Washington continues its budget talks before the automatic round of spending cuts kicks in on March 1st.

Weekly Overview:

Date Total Trades Dollar Volume $1m+ Trades S&P National Muni Bond Fund (MUB) Performance
Tuesday 02/19/2013 40,937 $4,158,489,944 968 -0.04%
Wednesday 02/20/2013 37,976 $4,715,403,543 1050 0.03%
Thursday 02/21/2013 41,706 $5,413,808,697 1249 0.13%
Friday 02/22/2013 42,285 $6,361,555,967 1698 -0.03%

The municipal bond market had a relatively active week, with trading volumes peaking on Friday. The iShares S&P National Municipal Bond Fund (MUB), which seeks to measure the performance of the investment grade segment of the U.S. muni bond market, traded in a narrow range throughout the week, only managing to post positive returns on Wednesday and Friday [see more Market Activity].

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