[loeg]

It's not that fewer muni bonds are being bought, but that fewer individuals are buying muni bonds:

> What’s disturbing about the data is that the number of investors claiming tax-exempt interest -- the municipal market’s constituency, if you will, is falling, after reaching a peak of almost 6.5 million in 2008.

The likely reason is that muni bonds aren't competitive with ordinary treasury bonds for people in lower tax brackets due to market pressure from investors in high tax brackets. So they make sense for fewer people and rational lower income investors move away from them.