Municipal bonds are a relatively inexpensive buy when compared to other taxable bonds, but absolute yield levels are quite low by historic standards.
This poses a quandary for investors looking to put money to work. Muni yield levels are lower than investors want, but cheap when compared to other markets. The current market conditions exist because a series of different events that occurred in the fourth quarter last year. With the holiday season done and the market beginning to speed up, participants disagree on whether the relative cheapness of munis, compared with other fixed-income asset classes, is drawing buyers back into investing.