Muni bond mutual fund outflows shrank to the least since late May, an indication that investor demand is trickling back to the marketplace.
Weekly reporting funds shed $159 million in the week of Sept. 25, marking an 18th consecutive week of outflows but a stark drop from last week’s outflow and the average over the past few months, Lipper FMI data show. The previous week, $1.10 billion fled muni bond funds.
During the week of May 29, $157 million flowed from weekly reporting muni bond funds.
Muni yields fell beyond the front end of the curve in a week when
The 10-year triple-A tax-exempt yield fell six basis points on the week to 2.54%. The 30-year yield dropped nine basis points over the week to 4.11%. The two-year held steady over the week at 0.36%.
Tax-exempt yields posted a mixed performance compared with Treasuries. Muni ratios to Treasuries mostly hovered, yet fell for credits maturing in two years.
Over the week, the 10-year finished flat at 96%. The 30-year also ended steady at 111%; the two-year closed the period richer, falling six percentage points to 103%.
Assets for all muni funds that report their flows weekly rose for a second straight week to $283.4 billion, following 10 consecutive weeks of decline. In the previous week they increased to $281.9 billion.
The value of the holdings for weekly reporting funds climbed $1.87 billion. The week before, they leaped $3.40 billion.
The four-week moving average for all municipal bond mutual funds that report their flows weekly was $1.12 billion of outflows, against $1.51 billion of outflows the week before.
Investors finally looked to long-term muni bond funds. Those long-term funds that report flows weekly recorded inflows, at $239 million, following 29 consecutive weeks of outflows. The previous week, they posted $473 million in outflows.
Weekly reporting high-yield muni bond funds recorded a second straight week of inflows, following 10 weeks of outflows. For the week of Sept. 25, investors allotted $399 million to high-yield funds, compared with $181 million that entered funds the prior week.
Assets for high-yield funds that report their flows weekly rose to $36.46 billion, from $35.70 billion the week before.
The value of the holdings for high-yield funds increased by $358 million. Last week, they rose by $597 million.
The four-week moving average for all high-yield municipal bond funds that report their flows weekly showed $37 million of inflows, compared with $147 million of outflows the previous week.
