Muni-Bond Auctions Are Disappearing as Volatility Rattles Market

Municipal-bond auctions are dwindling as states and cities rely on Wall Street bankers to navigate rocky financial markets.

Only $41 billion, or roughly one-fifth, of all long-term muni debt sales this year have been through competitive auctions among investment banks, according to data compiled by Bloomberg. That’s a 20% drop from last year and the smallest amount in at least a decade.

The shift reflects the volatility that has raced through markets as traders try to assess when the Federal Reserve will end the steep interest-rate increases that last year hit muni bondholders with the worst losses in over four ...