In the latest installment of Muni Minute, we look at the current municipal market environment. Volatility has taken over, as there is much uncertainty in the marketplace in regards to tax reform and interest rates and if there is one thing the market doesn't like, it is uncertainty. With yields being erratic, volume will be light this week but nonetheless the demand for munis remains strong.

VOICE OVER: After a busy January, activity in the municipal marketplace has slowed dramatically as traders and investors wonder where interest rates are headed. Issuance has been trending down and this week the primary market is only expected to see about $3.6 billion of sales. There are only 10 scheduled deals greater than $100 million and the largest deal of the week is only $281 million. There is currently a lot of pent-up demand for municipals and many deals that have come to market have been oversubscribed.

But based on Federal Reserve Chair Janet Yellen's most recent testimony, market participants have now realized that a rate hike could be on the table in March. One market source said that he believes a March hike would be somewhat healthy for the market, as it will reiterate what the Fed sees for the rest of the year and would take some uncertainty out of the market. Issuers will be heading into a choppy market, as muni yields continue to go up and down like a yo-yo. I'm Aaron Wentzman and this has been your Muni Minute.