Tax Day Is One Reason This Muni Yield Index Jumped 2,800%: Chart

The weekly benchmark for yields in the variable-rate tax-exempt bond market, after being stuck at a record-low 0.01 percent, has surged in the past four weeks: The SIFMA Municipal Swap Index reached 0.29 percent on Wednesday, the highest since January 2011. While part of the climb mirrors the jump in variable-rate demand note inventory, another reason is the lead-up to the U.S. tax payment deadline of April 15, according to Vikram Rai at Citigroup Inc. “Money market funds and especially tax-exempt money market funds witness outflows around tax-season as investors tend to sell their near cash alternatives in order to pay their tax bill,” Rai wrote in a report. “We see that the SIFMA index stays elevated about one month before and one month after the tax deadline.”

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