Outflows from Muni Bond Funds Increase to $738M

Municipal bond mutual fund flows remained solidly in the red for a 24th straight week.

Weekly reporting muni bond funds recorded outflows of $738 million for the week of Nov. 6, Lipper FMI data showed.

Outflows climbed from the week of Oct. 30, when investors pulled $503 million from the market. And they increased after two consecutive weeks of relatively improved investor demand, when outflows from the market receded.

Secondary market activity fell as the week's issuance arrived. Deals were well-received on Monday, and priced to move with concessions in yield on Tuesday. Secondary market activity accelerated on Wednesday.

Muni yields on the week from Friday rose by a few basis points beyond the front end of the curve; much of the market's weakening happened on Tuesday's session. Muni yields underperformed narrowly those of Treasuries at the short and intermediate parts of the curve.

The 10-year triple-A yield rose three basis points since last Friday, to 2.49%, Municipal Market Data numbers showed. The 30-year triple-A yield climbed two basis points over the span to 4.08%. The two-year held at 0.34% for an eighth consecutive session.

Muni ratios to Treasuries rose a couple of percentage points over the week across all but the long end of the curve. The 10-year skipped up two basis points to 96%.

The two-year increased three percentage points to 113% over the span, while the 30-year finished steady at 110%.

Assets for all muni funds that report their flows declined to $280.2 billion, after rising two straight weeks. During the previous week they climbed to $281.5 billion.

The value of the holdings for weekly reporting funds fell by $120 million. The week before, they rose by $1.45 billion.

The four-week moving average for all municipal bond mutual funds that report their flows weekly was $823 million of outflows, compared with $821 million of outflows the week before.

Those long-term muni bond funds that report flows weekly represented most of the losses over the span, with outflows of $450 million. They plunged from $221 million reported the previous week.

Weekly reporting high-yield muni bond mutual funds suffered outflows of $92 million for the week ended Nov. 6. The previous week, they reported inflows of $37 million.

Assets for high-yield funds that report their flows weekly slipped to $36.49 billion, from $36.56 billion the week before.

The value of the holdings for high-yield funds increased by $26 million. Last week, they rose by $257 million.

The four-week moving average for all high-yield municipal bond funds that report their flows weekly showed $72 million of outflows, versus $71 million of outflows the previous week.