ETFs

"It doesn't take but one comment or one market-moving data point to cause ETFs to shift the market pretty considerably," said Ajay Thomas, head of public finance at FHN Financial.

If the SEC grants exemptive relief to firms seeking to offer a multi-class structure, "we will see more ETFs of actively managed municipal bond strategies."

"Anytime you get a market off 50 basis points in a day, the bulk of that move is being driven by fast money and the fast money is in ETFs," said Michael Pietronico, CEO at Miller Tabak Asset Management.

The slowdown of growth in the fourth quarter does not imply there is dwindling demand for munis, said Pat Luby, head of municipal strategy at CreditSights.

BlackRock's move comes as money continues to flow out of muni mutual funds into ETFs and SMAs.

Kim Olsan, senior fixed-income portfolio manager at NewSquare Capital, discusses the municipal market's performance, the impact of rising yields and inflation, and the evolving role of ETFs and separately managed accounts as the market braces for record supply in 2025.

The face amount of munis outstanding rose to $4.171 trillion, a 0.8% increase from Q2 2024 and 2.9% from Q3 2023, according to the latest Fed data.

The number of active ETFs launched has skyrocketed this year, with 20 new funds launched year-to-date. This compares with the four passive ETFs created so far in 2024, according to Morningstar Direct data.

Data from the Municipal Securities Rulemaking Board indicates that trade volume may stay high after a consistent third quarter.

With supply ballooning, reinvestment dollars at lows of the year, J.P. Morgan's Peter DeGroot argues the next few weeks could offer the best opportunity to buy bonds of the year – and possibly the rate cycle. DeGroot talks about this, plus potential impacts of shifting investor behavior on market liquidity, and what the upcoming election might mean for tax policy and the muni market. Lynne Funk hosts.