Markets

Municipal bond mutual funds continued their hot streak. As the market saw modest firming on the week, muni bond funds saw inflows for a ninth consecutive week.

The municipal bond market emerged from a week of heavy issuance somewhat stronger past the front end of the yield curve.

Tax-exempt money market funds gave up the inflows they accumulated last week — and then some — when they lost $1.45 billion and total net assets dropped to $272.20 billion in the week ended June 11, according to the Money Fund Report, a service of iMoneyNet.com.

Despite Treasury outperformance and cheap ratios to municipal bonds, crossover buyers are keeping their distance from the tax-exempt market.

Executives from Fitch Ratings responded to issuer concerns, saying their agency does not require municipal bond issuers to sign indemnity agreements releasing Fitch from liabilities resulting from ratings.

Fitch Ratings has downgraded more than a dozen tender-option bond issues and variable-rate demand obligations.

Municipal bond exchange-traded funds have enjoyed rapid growth since their introduction in September 2007.

The hunt is on for yield in the municipal market as interest rates continue to hover around historical lows, forcing investors to use varying strategies to boost returns.

Municipal bond issuers have assembled a whale of a calendar for this week, with just over $12 billion slated to come to market, nearly double last week’s $6.35 billion total.