The rising federal tax rates are making tax-exempt municipal bonds more attractive for investors.

“I don’t think the need for tax-exempt income ever went away, and there appears to be pent-up demand,” John Miller, co-head of fixed income at Nuveen Asset Management LLC,said in the article.

Some predict that munis have further room to gain as new muni issuance fall short of rising demand. Vikram Rai, a fixed-income strategist at Citigroup Inc., estimates that issuance will fall to $280 billion this year, from $334 billion in 2013. [Low Supply to Support Municipal Bonds Market, ETFs]

“The primary market supply is very anemic and that’s really driving down yields,” Rai said in the article.

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

Max Chen contributed to this article.

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