The difference between short- and long-term yields in the $3.7 trillion municipal-bond market is the smallest in more than eight years. Benchmark 30-year munis yielded just 1.65 percentage points more than those on 2-year securities as of June 10, the smallest since January 2008, when the credit-market crisis was building. That difference, visualized as the upward-sloping yield curve, shows that investors are receiving less and less compensation for the risk of owning securities that don’t mature for decades.

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