After the municipal bond ETF market panicked and State Street halted cash redemptions, no one would guess that a winner would emerge from the chaos. But BlackRock[profile] iShares National AMT-Free Municipal Bond Fund quickly recovered, trading at $104.97 at 4 p.m. in new York, up 3.6 percent from Monday, Bloomberg's Michelle Kaske reported. It was the biggest two-day rally since October 2008.

The ETF fell to the cheapest it had been in two years. The ETF's gain is reflective of investors looking to take advantage of the opportunity to buy cheap muni bond ETFs.

Investors in the highest tax bracket, the benchmark yield for 10-year municipal bonds gives a greater taxable return at 4.85 percent than Treasuries maturing in 10 years, which fell to 2.42 percent.

The ratio of the yield of munis to those on Treasuries is about 115 percent, the highest since July 2012, Bloomberg data show. The higher the ratio, the cheaper local debt is when compared with equivalent U.S. government securities.

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Edited by: Casey Quinlan


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