Taxable vs Tax Exempt Bonds

Note that taxable bonds have a flatter yield curve and in the case of an upward sloping yield curve the investor has less incentive to extend duration as there is relatively less upside in higher duration bonds due to tax effect

Tax exempt bonds generally offer a greater incentive to extend duration compared to taxable bonds. Therefore they would have a steeper yield curve.

A US investor may decide that it is more efficient to place taxable bonds in a tax exempt investment account or a tax deferred one whereas tax exempt bonds can be placed in a taxable account.