Muni Bond Holdings Cut by Mutual Funds, Households, Fed Says

U.S. mutual funds, money-market accounts and individuals cut their holdings of municipal bonds as borrowing by state and local governments dropped during the first three months of the year, the Federal Reserve said.

The number of municipal bonds outstanding slid by $20.5 billion to $2.9 trillion during the first quarter, the Fed said in a release today. That marked the steepest drop since 1995, according to data compiled by Bloomberg. Holdings by households, the biggest owners of the debt, slipped by $5.6 billion to $1.08 trillion, while those owned by money-market and mutual funds dropped by $23.8 billion.