The forces behind this weeks market selloff took their toll on flows to municipal bond mutual funds.
For the first time in nine weeks, muni bond funds that report flows weekly recorded outflows for the week of March 6, at $97 million, Lipper FMI numbers show. For the week of Feb. 27, they saw inflows of $324 million.
Investor confidence in the equities market propelled the Dow Jones Industrial Average to its third consecutive day of record highs. Traders report that bond investors whod been receiving dividends have been looking for similar gains theyre hearing about over in the equities markets.
The muni market saw the triple-A 10-year and 30-year yields climb on the week since Friday, Municipal Market Data numbers showed. The 10-year yield vaulted 16 basis points to 1.94%; the 30-year jumped 12 basis points to 3.02%.
Treasury yields also took it on the chin across the curve over the same span. The benchmark 10-year yield soared 15 basis points to 2.00%. The 30-year rocketed 14 basis points to 3.20%; the two-year rose two basis points to 0.26%.
Consequently, muni ratios to treasuries were about flat beyond the front end of the curve and remained under 100%. Two-year ratios fell 10 percentage points over the week to 119%.
Muni volume this week received a solid reception, largely outperforming MMD yields on the days issued. The secondary market saw relatively heavy activity, though deals took concessions on prices to get done.
Assets for all muni funds that report their flows weekly fell for the first time in four weeks to $325.4 billion. The week prior, they reported $327.7 billion.
The value of the holdings for weekly reporting funds plunged by $128 million. The week before, they increased by $773 million.
The four-week moving average for all municipal bond mutual funds that report their flows weekly was $252 million of inflows, falling slightly from $304 million the week before.
Long-term bond funds that report their flows weekly saw outflows for the week at $72 million. That represented a decline from the $114 million of inflows they reported the week before.
High-yield muni funds also reported outflows after eight consecutive weeks of inflows. For most of 2012, flows were positive.
High-yield funds that report weekly saw $1.3 million in outflows, Lipper said. The previous week, they reported almost $70 million in inflows.
Assets for high-yield funds that report their flows weekly rose for a 10th straight week to $45.58 billion, up a tad from $45.50 billion the week before.
The value of the holdings for weekly reporting high-yield funds rose by $84 million. Last week, they increased by $74 million.
The four-week moving average for all high-yield municipal bond funds that report their flows weekly showed $54 million of inflows, falling from $60 million of inflows the week before.