Municipal bonds could record worst year since 1999

12/19/2007 | Bloomberg

Municipal bonds are on pace to record their worst year since 1999, according to Merrill Lynch & Co. indexes. Federal Reserve data show that securities firms reduced their municipal bond holdings at the fastest rate in 12 years during the third quarter, leading to the gloomy outlook for year-end returns. "There's no money flowing into the market right now from hedge funds, banks or anywhere else," said Thomas Metzold, manager of the $6 billion Eaton Vance National municipal fund.

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