The iShares National AMT-Free Muni Bond ETF (NYSEArca: MUB) is on track for a gain of nearly 3% this week to recoup at least some of the losses it suffered during the June sell-off.
Also, the discounts to NAV seen in muni bond ETFs last week have pretty much gone away as the market stabilizes.
MUB and other ETFs in the category have been volatile this month on rising interest rates and negative headlines on the fiscal woes faced by some U.S. cities and states.
Also, worries that muni bonds could lose their tax exemptions are back in play. [Muni Bond ETF Discounts Fade as Market Rebounds]
“The municipal bond market is circling the wagons once again following the latest suggestion that the Obama administration wants to reduce the 100-year-old tax exemption on muni bond income,” reports Jeff Benjamin for Investment News.
Earlier this week, Reuters reported the White House is still pursuing a proposal to limit the tax exemption for interest paid by municipal bonds.
The fiscal cliff compromise answered the question as to whether interest on municipal bonds would be taxed in 2013, says Morningstar analyst Timothy Strauts. But it’s not the end of the story.