James Ramage

NEW YORK — The municipal market ran out of steam on Friday.

Investors this past week returned to their acquired habit of pulling money out of municipal bond mutual funds just seven days after they ended a 29-week trend of outflows.

Diverging demand among investor classes set the tone for municipal bond yields Thursday, which continued to decline on the intermediate and long ends of the curve.

Diverging demand among investor classes set the tone for municipal bond yields Thursday, which continued to decline on the intermediate and long ends of the curve.

A cautious municipal market on Wednesday steered a narrow course between the Scylla of free-falling equities and the Charybdis of rocketing Treasuries.

NEW YORK — A cautious municipal market on Wednesday steered a narrow course between the Scylla of free-falling equities and the Charybdis of rocketing Treasuries.

Investors on Monday looked to the economy for direction as another relatively healthy calendar gradually lumbered into focus for the week. This meant traders saw little action in the secondary market on the day, according to a New York trader.

NEW YORK - Investors on Monday looked to the economy for direction as another relatively healthy calendar gradually lumbered into focus for the week. This meant traders saw little action in the secondary market on the day, said a trader in New York.

The hemorrhaging of cash from municipal bond mutual funds finally stopped in the week ended June 8.

The hemorrhaging from municipal bond mutual funds is over.

Numbers from the Federal Reserve's flow of funds for the first quarter this year place total muni bond debt at $2.905 trillion. That compares to $2.925 trillion in the last quarter of 2010, according to Fed numbers, and $2.843 trillion over the same period last year.

Municipal bond index yields fell modestly over the week. Rates measured by the one-year note, as well as 11- and 20-year bond indexes slipped by up to two basis points.

When the Build America Bond program ended there were two schools of thought. One argued that BABs would become an orphan class, with prices in the secondary market suffering from illiquidity. Another group thought there would be some scarcity value to the product and they would appreciate in value.

Individual investors pulled cash from municipal bond mutual funds for the 29th straight week, according to Lipper FMI. While the rate of withdrawals appeared to be slowing in early May, the pace has picked up again since then.

Investors this past week withdrew money from municipal bond mutual funds at a pace not seen in a month. There were net outflows of $436 million from muni funds that report their flows weekly in the week ended June 1, according to Lipper FMI.

All of The Bond Buyer’s long-term weekly yield indexes declined this week, powered by light issuance and predictions of strong seasonal cash inflows.

Bank credit facilities used to roll over variable-rate debt have so far been up to the task of handling the initial wave of enhancements that has been expiring this year.

Investors continue to withdraw money from municipal bond mutual funds. Muni bond funds that report their flows weekly had net outflows of $296 million in the week ended May 25, according to Lipper FMI.

Investors continue to pull money from municipal bond mutual funds. Muni funds that report their flows weekly had net outflows of $296 million in the week ended May 25, according to Lipper FMI.

For portfolio managers of municipal bond funds, the past several months haven’t been for the faint of heart. Still, muni fund managers report mixed experiences in riding out the prolonged flood of outflows.