Citigroup’s Municipal Markets Research issued a report this morning indicating the municipal bonds market shrank by approximately $2.1 billion in the first quarter of 2019, based on Federal Reserve data.

On a sequential quarter basis, U.S. banks continued to reduce their municipal holdings, maintaining a steady sell trend since the passing of the Tax Reform Act (the lower corporate tax reduced the post-tax benefit for holding munis). Money Market Fund and Broker-Dealer holdings also decreased their holdings in Q1.

After a torrent of sale activity by Property Casualty (P&C) insurers last year, P&C companies appeared to have increased their holdings in Q1.

Life insurers holdings ticked up slightly, but are slightly down year-on-year.

Households – including SMA holdings – remain the largest holders of municipal bonds, increasing their holdings by $32.6 billion in Q1 to $1.875 trillion or roughly 46.7% of the market.

Contact Kyle Skinner at KS@BuyMuni.com.