Group 1 - CreditSights reported that cash inflows into U.S. municipal bond funds reached the highest level since 2007, with approximately $2.4 billion in the week ending September 10, marking a 137-week high [1] - Exchange-traded funds (ETFs) also saw inflows of $2 billion, the highest in four weeks, while investors withdrew about $20 billion from U.S. equity funds during the same week [1] - The anticipation of the Federal Reserve restarting interest rate cuts has driven investors towards U.S. state and local government bonds, prompting a rebalancing of portfolios as stock prices hit historical highs [1] Group 2 - Municipal bonds returned 2.62% in September to date, outperforming investment-grade corporate bonds (1.63%) and Treasuries (0.84%) [2] - For most of the year, municipal bonds had underperformed compared to these asset classes due to record state and local government bond issuance and uncertainties surrounding tax-exempt bonds from the Trump administration's tax and spending proposals [2] Group 3 - A weak labor market report contributed to a strong rebound in municipal bonds, but an increase in bond issuance and a seasonal decrease in cash available for reinvestment may slow performance [3] - Approximately $16.3 billion in new bonds is expected to be issued in the next 30 days, which could impact market dynamics [3] - Tactical investors may pause or consider profit-taking, but the market is expected to perform well in October if bond issuance does not significantly increase [3]