“We have no expectation or intention to get involved in state and local finance,” Bernanke said in testimony before the Senate Budget Committee. The states, he said later, “should not expect loans from the Fed.”

Meanwhile, investors are still piling into municipal bond securities. [Muni Bond ETFs Stay the Course]

“There’s still strong demand because there are more compelling reasons to jump into municipal bonds,” James Barnes, senior fixed-income manager at National Penn Investors Trust Co, said in the MarketWatch article.

For the year-to-date, long California muni funds have returned 6.61%, and national long funds have gained 5.69%.

Some other muni bond ETFs include:

  • SPDR Barclays Capital Municipal Bond ETF (NYSEArca: TFI): 0.23% expense ratio; 3.1% yield.
  • PowerShares Insured National Municipal Bond (NYSEArca: PZA): 0.28% expense ratio; 4.29% yield.
  • Market Vectors High-Yield Municipal ETF (NYSEArca: HYD): 0.35% expense ratio; 5.21% yield.

iShares S&P National Municipal Bond Fund

For more information on the munis market, visit our municipal bonds category.

Max Chen contributed to this article.