The tax-exempt market may have experienced a sizable backup in yields on the week, but muni bond mutual funds still saw robust inflows.
Muni bond funds saw $593 million of inflows from funds that report their flows weekly for the week ended June 6, according to Lipper FMI.
The numbers rose from those of the previous week. There were net inflows of $439 million the week ended May 30. The market has now seen positive flows for the past eight weeks, and 37 of the past 40 weeks.
The market expects a substantial uptick in new issuance this week. By the same token, Treasury yields rose on news that the European Central Bank would help Greece and yields at the 10-year part of the curve had fallen too low. Finally, some in the bond markets felt that investors had overreacted to last week’s sub-par employment news.
However, the municipal market continues to show solid technicals, industry pros say. And despite the sell-off, muni ratios to Treasuries remain extremely cheap, with maturities across the curve all settling above 110%.
But muni demand this week was finally not commensurate to supply. Still, redemption money that investors should see soon will need to be invested.
This week, assets for all funds that report their flows weekly increased to $299.21 billion from $298.40 billion the week before.
The value of the holdings for weekly reporting funds rose by $212 million. The week before, they rose by $252 million.
The four-week moving average for all municipal bond mutual funds that report their flows weekly saw a $593 million inflow, down slightly from a $670 million gain the week before.
Long-term bond funds continued to see hefty inflows, well more than half of the overall figure for muni bond funds. Long-term bond funds that report their flows weekly saw gains to the tune of $291 million, up from $244 million the week before.
High-yield muni funds posted a strong week. They have seen inflows for 11 consecutive weeks, and 25 of the previous 26 weeks.
Funds that report weekly saw $182 million in inflows, Lipper said. The previous week, high-yield funds reported $136 million in inflows.
Assets for high-yield funds that report their flows weekly increased to $40.53 billion, up from $40.20 billion the previous week.
The value of the holdings for weekly reporting funds increased by $147.2 million. Last week, they rose by $55.9 million.
The four-week moving average for all high-yield muni bond funds that report their flows weekly was a $179 million inflow, down from a $198 million inflow the week before.