Dec 7 (Reuters) - The U.S. municipal bond market shrank to $3.803 trillion in the third quarter of 2017 after growing to $3.827 in the previous quarter, according to a quarterly report from the Federal Reserve released on Thursday.
Households, or retail investors, held $1.562 trillion of debt sold by states, cities, schools and other muni issuers in the latest quarter, down from $1.612 trillion in the second quarter, the Fed report said.
U.S. banks’ muni bond buying fell to $7.1 billion in the third quarter from $10.9 billion in the second quarter. Property and casualty insurance companies also acquired fewer munis in 2017’s third quarter at $3.4 billion versus $5.8 billion in the second quarter. Life insurance companies picked up $5.4 billion of the bonds. (Reporting By Karen Pierog Editing by Chizu Nomiyama)