U.S. municipal bonds fell 4.4% in September, their worst monthly performance since the 2008 Lehman crisis. The Bloomberg Municipal Bond Index showed the decline was the most severe in nearly two decades, primarily due to inflation concerns, the risk of Federal Reserve interest rate hikes, and escalating conflict between the U.S. and Iran, which heightened market worries about inflation. This led to a rapid surge in municipal bond yields to their highest levels since at least 2011. However, the market began to stabilize this week, with funds flowing back into related ETFs.