Securitization

Compensation played a role in the departures, sources said.

The well-known muni strategist said he's pursuing "more market-related opportunities."

Some of the issuance stems from project finance largely "drying up" because of where rates are, said Jennifer Johnston, senior vice president and director of research, municipal bonds, for Franklin Templeton Fixed Income. 

The market has seen seven consecutive weeks of outflows. "This is not surprising given that retail investors tend to follow performance," said Daryl Clements of AllianceBernstein.

"Easing tariffs, a slowing economy and an improved supply/demand outlook for munis in May and onward should drive muni market pricing going forward," BofA strategists said.

Investors pulled $397.4 million from municipal bond mutual funds in the week ended Wednesday, following $1.258 billion of outflows the prior week.

The escalating dispute between the prestigious issuer and the White House is spooking some bond holders and creating opportunities for others.

The market is still in a negative technical period, said Chris Eustance, a portfolio manager at Morgan Stanley Investment Management.

Muni yields may "continue to stay elevated due to supply and demand factors," rather than concerns over credit quality, said Cooper Howard, a fixed income strategist at Charles Schwab.

Monday saw a reversal from the past week as muni yields rose three to 10 basis points, depending on the curve. Despite this, Monday's losses were not enough to erase last week's gains as yields are still lower than they were two weeks ago.