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Quarter-End Insights

Our Outlook for the Municipal Markets

More than any time since the Depression the municipal market has become a credit market.

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  • The timing of the Fed's taper decision and the horror show over the country's debt ceiling are captivating the markets, but evolving municipal fundamentals are a bigger story for muni investors.
  • The situation in Detroit reveals a number of key elements that are also significant throughout the municipal market--including the role of bond insurance and use of derivatives, as well as pension and retirement liabilities.
  • In the aftermath of Detroit, market participants have cast a critical eye on other stressed municipalities--especially Puerto Rico, whose debt is widely held and, if impaired, could have a wide-ranging impact.


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Jeff Westergaard does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.