Municipal bonds are enjoying a much needed break from the Detroit-inspired panic, with municipal bond market seeing its biggest rally since April, Bloomberg's Brian Chappatta reports.

Chappatta writes that the rally precedes two days of deliberations by Fed policymakers on whether to begin the tapering.

The rally extended, with investors buying Puerto Rico, Illinois and California debt before the Fed meeting, Bloomberg writes. Bloomberg reports that yields on top-rated municipal bonds maturing in a decade fell 0.04 percent point to 2.99 percent, the lowest it's been since August 16 and the tax-exempt interest rate reached a nearly 30-month high of 3.15 percent on September 6, then fell the most in five months.

“The muni market rallied nicely,” David Manges, muni trading manager at BNY Mellon Capital Markets LLC. “This is likely to be a volatile week.”

The yield on 10-year U.S. Treasuries dropped by 0.11 percentage point to 2.78 percent on Monday, Bloomberg reports.

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Edited by: Casey Quinlan


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