Skip to content
etf.net

Buyer’s guidesCategory Review

Tax-exempt yields reversed a September selloff, and the median intermediate municipal bond fund is up 1% over the year

The 10-year yield on top-rated municipal bonds was a basis point from its Aug. 14 level by Nov. 6, while the 10-year Treasury was still higher than on Aug. 14.

ETF.net Research

The Georgia State Capitol building with its golden dome stands prominently against a blue sky.

Key takeaways

  • The 10-year municipal yield was back near its August level while Treasuries stayed higher.
  • After a third-quarter loss, the median intermediate municipal fund is up 1% over the year.
  • The median municipal fund trailed the iShares Core U.S. Aggregate Bond ETF, then finished ahead.
  • Investor selling likely pushed tax-exempt bonds down further than Treasuries in September.

The 10-year AAA municipal yield, a benchmark for the highest-rated tax-exempt bonds, was 3.23% on Aug. 14, 4.23% on Sept. 29 and 3.24% on Nov. 6, AllianceBernstein reported in its Nov. 9 market note. AllianceBernstein called that a round trip.

The median intermediate municipal bond fund is up 1.0% over the past year through Nov. 12, income included, after losing 4.8% in the third quarter.

These funds hold bonds of U.S. states and cities and seek income exempt from U.S. federal income tax. The largest, PIMCO Intermediate Municipal Bond Active Exchange-Traded Fund MUNI, seeks that income while preserving capital.

Tax-exempt yields rose more than Treasuries

The 10-year U.S. Treasury yield was 4.68% on Aug. 14, 5.26% on Sept. 29 and 4.86% on Nov. 6. It rose less than that municipal yield into late September, then fell, and it was still above its Aug. 14 level.

The municipal yield is tax-exempt. The Treasury yield is not.

The U.S. Municipal Securities Rulemaking Board (MSRB) said in its third-quarter summary that the volume of selling by investors was likely a major reason tax-exempt bonds fell further than Treasuries in September.

Goldman Sachs Asset Management said in its Oct. 12 review that, beyond the rise in Treasury yields, heavy tax-loss selling, slower reinvestment of cash from bonds and a large supply of bonds pushed municipal yields higher.

The MSRB wrote in its October recap:

“The rise in benchmark yields in September was the largest monthly increase in years. However, the rally in October erased most of that increase.”

Where intermediate municipal funds stand

For 2026 through Nov. 12, the median fund is up 0.6%. MUNI lost 4.8% in the quarter, the same as the median, and returned 0.8% over the past year, close to the category's 1.0%.

The iShares Core U.S. Aggregate Bond ETF AGG lost 3.5% in the third quarter and 1.3% over the past year.

Munis lost more than AGG in the quarter, then finished the year ahead

Total returns through Nov. 12, 2026. Third quarter is June 30–Sept. 30.

  • Median, year+1.0%
  • MUNI, year+0.8%
  • AGG, year−1.3%
  • AGG, Q3−3.5%
  • MUNI, Q3−4.8%
  • Median, Q3−4.8%

MUNI tracked the median. AGG lost less, then stayed negative.

The median municipal fund lost more than AGG in the quarter. Over the year, it finished ahead of AGG.

Want more of our stories in Google’s Top Stories? Add etf.net as a preferred source on Google

ETFs in this story

BMUNIPIMCO Intermediate Municipal Bond Active Exchange-Traded Fund63/100AAGGiShares Core U.S. Aggregate Bond ETF87/100

Related articles