Inflows returned to the market for municipal bond mutual funds with a vengeance.
Those funds that report their flows weekly recorded inflows of $1.55 billion for the week ended Jan. 9, Lipper FMI numbers show. That's up from the week ended Jan. 2, which saw revised outflows of $6.8 million from weekly reporting funds.
Flows to muni bond funds that report their flows weekly had been negative for the preceding three weeks, measuring $2.3 billion at their highest for the week of Dec. 19.
Over the past week, muni bond investors have seen rising demand amid little issuance. Instead they've focused their activity in the secondary market.
Tax-exempt yields have fallen on the week across the curve on account of relatively heavy trading in the secondary. Industry watchers also expected the flows to turn positive after Congress agreed on a fix to the fiscal cliff to start the new year.
For 2012, the market saw a total of just four weeks of outflows, including the final two weeks of the year.
Assets for all muni funds that report their flows weekly rose for a second consecutive week to $320.9 billion, from $318.1 billion the week before.
The value of the holdings for weekly reporting funds was positive for a third straight week, rising by $$1.14 billion. The week before, it rose by $a revised $672 million.
The four-week moving average for all municipal bond mutual funds that report their flows weekly was $298 million of outflows, up from a $608 million loss the week before.
Long-term bond funds that report their flows weekly reported inflows for the first time in four weeks, at $780 million. This represented a large rise from the $288 million of outflows they reported the week before.
High-yield muni funds also saw inflows for the first time in four weeks. Before the outflows, flows had been positive for most of 2012.
High-yield funds that report weekly saw $278 million in inflows, Lipper said. The previous week, they reported $104 million in outflows.
Assets for high-yield funds that report their flows weekly rose for a second consecutive week to $43.74 billion, up from $43.28 billion the week before.
The value of the holdings for weekly reporting high-yield funds increased by $184 million. Last week, they rose by $115 million.
The four-week moving average for all high-yield municipal bond funds that report their flows weekly was $256 million of outflows, climbing somewhat from $284 million of outflows the week before.
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