U.S. Markets

U.S. muni bond market rises to $3.853 trillion in second quarter: Fed

FILE PHOTO: United States one dollar bills are inspected under a magnifying glass during production at the Bureau of Engraving and Printing in Washington November 14, 2014. REUTERS/Gary Cameron/File Photo

NEW YORK (Reuters) - The size of the U.S. municipal bond market inched up to $3.853 trillion in the second quarter, from $3.851 trillion the quarter before, the Federal Reserve said in a report released on Thursday.

Households, or retail investors, held $1.625 trillion of debt sold by states, cities, schools and other muni issuers in the latest quarter, down from $1.631 trillion in the first quarter, the Fed report said.

Property and casualty insurance companies took on $16.7 billion of munis in the second quarter, a rise from $14.1 billion in the previous quarter. Life insurance companies bought $4.6 billion, compared with $7.7 billion the prior quarter.

Exchange-traded funds bought $7.9 billion of muni funds compared with $2.8 billion in the first quarter.

Meanwhile, U.S. mutual funds’ buying of municipal bonds dropped to $20.5 billion in the second quarter from $64.9 billion the first quarter.

U.S. banks continued to offload muni bonds in the second quarter. The financial institutions shed $40.3 billion, after selling $55.7 billion the previous quarter.

Reporting by Laila Kearney; Editing by Steve Orlofsky