2010 has been pretty volatile so far for most asset classes. Stocks and bond have traded all over the board and May was particularly ugly for global stocks and the corporate bond market. But one sector has held up really well: high-yield municipal bonds. I actually did a post on this a year ago and this space has been really interesting to follow since then. Prices for high-yield municipals fell off a cliff in late 2008 due to a liquidity crunch and heavy flight-to-quality trade. In May, during intense volatility, credit spreads on the benchmark high-yield corporate bond index widened by another 141 basis points to almost 7% above treasuries. However, the yield difference between investment-grade munis and high-yielding munis widened by only 2 bps to about 3.5%.