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Abstract: 

As with other asset classes, the municipal market’s recovery has continued through most of 2009, culminating in a nine-week rally that produced record low yields by the end of September. For municipals, summer strength was the direct product of a supply/demand imbalance between massive new inflows into the tax-exempt fixed income mutual funds and—because of the generous federal subsidy given to Build America Bond issuers—a smaller calendar of new tax-exempt product.

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Affiliations:  1: Municipal Market Advisors; 2: Municipal Market Advisors.