Markets

Rumblings heard from Washington recently regarding a threat to the tax-exempt status of municipal bonds don't seem to trouble retail investors, who have increased their purchases of munis this year, mostly through mutual funds.

What kinds of funds are retail investors interested in and what does it mean for the market?

Municipal portfolio managers say retail investors are turning to tax-exempt bond funds because they see them as a relatively safe harbor in stormy seas.

Investors are flush with cash, but they will have less to choose from in the municipal bond market this week.

Over the last four years there has been an "embryonic trend" of municipal bankruptcies, in the words of Arent Fox partner David Dubrow. These include Vallejo, Calif., Central Falls, R.I., Harrisburg, Pa., and Jefferson County, Ala.

WASHINGTON — A majority of governments, nonprofits, corporations and institutional investors surveyed would either reduce or discontinue their use of money market funds if the Securities and Exchange Commission adopted certain reforms, such as switching to a floating net-asset value, according to a study done for the Investment Company Institute.

Municipal bond yields fell this week amid relatively heavy issuance and dithering Treasuries.

The municipal market can anticipate a slight uptick in volume this week before smaller calendars are expected to close out the month.

After 18 consecutive weeks of inflows in the market, and 29 weeks in positive territory out of the past 31, municipal bond mutual funds finally had a week of slight outflows.