With net redemptions from municipal bond funds topping $1 billion in the past three weeks, the usual October and November pickup in new issues - if it occurs - could spell trouble.

James Kochan, head of fixed-in-come asset management at Robert W. Baird & Co., said that the $1 billion of redemption as reported by AMG Data Services may not be "dreadful," but it is "another negative piece of information in a market that has plenty to chew on already." If the municipal market sees any kind of a recovery in new-issue volume in the fourth quarter, "it seems to me that the muni market is going to be in trouble," Kochan said.

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