Bloomberg writes, "No Respite in Muni Money Market Rout Seen as Key Rate Surges." It says, "A corner of the municipal-​bond market that has quietly enjoyed near-​zero borrowing costs for more than six years has seen interest rates spike by nearly 7,​000 percent since February as investors flee tax-​exempt-​money-​market funds. And it may soon get worse with investors starting to price in higher benchmark rates in recent weeks. While the Federal Reserve isn'​t seen tightening at this week'​s policy meeting, U.​S. central bankers may still boost rates as soon as December, futures contracts indicate. "If the Fed hikes, you could see higher short-​term rates," said Anthony Valeri, fixed income strategist for LPL Financial in San Diego. Investors in munis with yields that reset periodically "​will see higher yields," he said." The article adds, "Municipal money-​market assets have shrunk $​110 billion year-​to-​date, according to Bank of America Merrill Lynch data. They'​re now at the lowest since 1999 as investors shifted money into funds that buy only government debt, which are exempt from the new Securities and Exchange Commission rules that require floating net-​asset values and impose liquidity fees and redemption suspensions under certain conditions. Since the first of the year, the yields as measured by the SIFMA Municipal Swap index, a measure of tax-​exempt debt with rates that reset every week, have risen to about 0.​7 percent from 0.​01 percent, the rate at which it had been near for about six years."

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