Markets

"While the shutdown will eventually be resolved, present circumstances may catalyze tactical investment opportunities as a way to capture even more compelling yield and income opportunities," said Jeff Lipton, municipal market intelligence analyst for The Bond Buyer.

The rating agency cited narrowing reserves and the expectation that the city will experience declining revenues next year.

The Baa3 rated government will now have more trouble supporting the struggling Guam Memorial Hospital, Moody's Ratings said.

If the shutdown lingers, disruption to key economic data releases could increase market uncertainty, said Tom Kozlik of HilltopSecurities.

Sophisticated issuers and investors shared insights into how they navigate the complexities of the municipal bond market at The Bond Buyer Infrastructure event.

October has historically not been "particularly kind to the municipal market, as it tends to be one of the heavier supply months of the year," said Daryl Clements, a portfolio manager at AllianceBernstein.

The muni market may be shaken by a government shutdown, driving short-term volatility and wider spreads, said James Pruskowski, a public finance strategist.

Muni yields rose up to eight basis points, depending on the scale, with the largest losses again on the front-end of the curve.

Bond attorneys are pondering language governing tax-exempt bonds used to finance spaceports.

The short-end correction has been "driven by a solid labor market report, which pushed Treasury yields higher as expectations for additional Fed rate cuts tempered," said Alice Cheng, director of municipal credit and investor strategy at Janney.