A 10% risk-free yield? For some, yes.

Municipal bonds occupy an unusual spot in the market: their appeal depends less on the headline yield than on the investor's tax bracket. Because muni interest is generally exempt from federal income tax—and often from state and local tax as well—a seemingly modest coupon can translate into a far larger effective return for someone in the highest tax tiers.

That is where the "10% risk-free" framing comes from. For investors facing combined federal, state, and local rates at the top end, a tax-exempt yield can be worth substantially more than its stated figure once the tax savings are factored in. The same bond may look unremarkable to an investor in a lower bracket.

What to watch: muni yields move with the broader rate market, and tax-exempt status is not the only consideration. Credit quality of the issuer, call features, and liquidity all shape the actual outcome. The comparison only holds if the tax exemption genuinely applies to your situation—so the calculation, not the headline, is what matters.