Fixed income

Redemptions since Dec. 2 total $15.76 billion.

According to a company memo, “a big driver of [Morgan Stanley's] future success will be the continued build-out of our sales and trading platform and, in particular, our strategy and footprint in fixed income."

The company indicated in a Thursday SEC filing it is postponing its plans to offer short-, intermediate- and long-term municipal bond index funds.

Most municipal bond exchange-traded funds in the fourth quarter performed noticeably worse than the indexes they were designed to track. Or, depending on your perspective, they performed noticeably better.

Investors kept pulling their cash from municipal bond mutual funds at a record pace last week as frightened money continued to flee the market.

No sooner did Build America Bonds become orphaned than they caught fire.

For more yield, consider actively managed funds with broad discretion and floating rate funds

Bank of America Merrill Lynch in 2010 reclaimed its title as the top underwriter of municipal debt, thanks mainly to its dominance in the competitive market.

Despite dire warnings of imminent government collapse, since the middle of 2009, only three municipal issues in the “safe” sectors--general obligation, tax backed and essential services—have defaulted, according to Municipal Market Advisor’s data.

Municipal market groups next year will face an uphill battle trying to get Congress to resurrect the Build America Bond program and other bond-related tax incentives that expire Dec. 31.

MFS Investment Management has historically been best known for its equity funds — but it’s the firm’s Municipal High-Income Fund (MMHYX) that stands out as a gem of consistency.

Clearly Loomis Sayles is not going to pay heed to the weekly ups and downs of bond market activity with this fund.

Faced with the loss of stimulus aid, state and local governments are hoping the economy will rebound in time to support their budgets and defuse market concerns over credit downgrades and possible bond defaults, market participants said in their outlooks for 2011.

Record municipal bond mutual fund redemptions have emerged as a threat to the rally most market participants expected to kick off early next year, as the anticipated slowdown in the supply of new bonds is met with a wave of selling by mutual funds.

Investors are also likely to move into corporate bonds and real estate.

The tax-free money market fund industry continues to shrink rapidly, squeezing what had been a major source of short-term credit for municipalities and arguably leading to higher borrowing costs for state and local governments.

Some transaction participants appear to be rushing to market questionable Build America Bond, bank-qualified or other municipal bond deals before tax incentives expire at the end of the year and risking Internal Revenue Service enforcement action for violations of tax requirements, according to market sources.

Investors continued to ferry cash out of their municipal bond mutual funds at historic rates last week as a tumultuous sell-off sowed fear among buyers.

Morningstar said investors pulled $7.6 billion from muni bond funds, the category’s worst month for outflows except for the $8 billion redeemed in October 2008 during the credit crisis peak.

A change in the methodology the Federal Reserve uses to measure who owns municipal bonds has masked the growth in foreign ownership of state and local government debt.