A painful wave of fixed-income market sell-offs is eroding returns on US state and local government debt, driving the yield on benchmark 30-year municipal bonds above the 5% mark. According to data compiled by Bloomberg, the yield rose by up to 8 basis points, hitting 5.03%, the first time since at least January 2011. As of 1 p.m. New York time on Thursday, 10-year municipal bond yields rose 8 basis points to 3.95%. Inflation concerns and expectations of further interest rate hikes from the Federal Reserve have disrupted the municipal bond market. As of Wednesday, municipal bonds fell 2.8% in September, making the asset class expected to record its worst monthly performance since 2023.

A painful wave of fixed-income market sell-offs is eroding returns on US state and local government debt, driving the yield on benchmark 30-year municipal bonds above the 5% mark. According to data compiled by Bloomberg, the yield rose by up to 8 basis points, hitting 5.03%, the first time since at least January 2011. As of 1 p.m. New York time on Thursday, 10-year municipal bond yields rose 8 basis points to 3.95%. Inflation concerns and expectations of further interest rate hikes from the Federal Reserve have disrupted the municipal bond market. As of Wednesday, municipal bonds fell 2.8% in September, making the asset class expected to record its worst monthly performance since 2023.