State governments and the fixed income market

It's not just pensions that state governments are watching in the current market turmoil. State and local governments are facing costs as high as 9% on variable-rate demand notes as outflows from money-market mutual funds continue. Current conditions have led Regional Bond Dealers Association head Mike Nicholas to call this the "most stressed fixed income market in our lifetimes." Muni bonds are at a six-year high, and some local governments are having to decide whether to try and ride out the storm or pull their general obligation bonds off the market to pay off short term debt. Here's more from Bloomberg.