About 37 percent of municipal bonds are held directly by households and 32 percent is held by mutual funds, according to U.S. Federal Reserve data.
Bond investors who purchased individual bonds with a long- term time horizon generally should not sell, Kane said. They should selectively trim holdings with very low interest rates or long time horizons, and bonds likely to be downgraded.
"The fundamentals aren't flashing a red warning sign," he said.