(Bloomberg) — Municipal bonds rose alongside Treasuries Monday as investors rushed into haven assets after the rapid ascent of a Chinese AI startup rattled the US stock market.
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Benchmark state and local government yields fell as much as 6 basis points as of 4 p.m. New York Time on Monday. Those on 10-year securities dropped 6 basis points to 3.07%, the lowest since Dec. 18, according to data compiled by Bloomberg.
Investors sought safety in fixed income after Silicon Valley heaped praise on China’s ChatGPT rival, DeepSeek, while technology behemoths Nvidia Corp. and Oracle Corp. plunged alongside chipmakers.
“Municipals will benefit from the flight to quality, particularly in the attractive absolute yield environment,” said Shannon Rinehart, a co-lead of municipal bond investments at Columbia Threadneedle Investments.“It’s giving investors a really good reason to do some re-balancing on the back of what we’re seeing in the tech sector.”
To JPMorgan Chase & Co. strategists led by Peter DeGroot, the Treasury gains “bodes well for municipals, as it is likely to trigger inflows into municipal ETFs and, if sustained, into open-end funds as well.”
“This is particularly pertinent given the lighter supply week and the substantial reinvestment capital anticipated in February,” they wrote in a note to clients.
–With assistance from Amanda Albright.
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