Markets

Most of The Bond Buyer’s weekly yield indexes increased this week as an earlier sell-off that pushed 30-year yields beyond the 5% threshold outweighed the rally that followed.

Mutual funds have emerged as the dominant source of selling pressure for state and local government paper in the new year as investors keep pulling out their money, forcing fund complexes to sell bonds into an already jittery market.

Volume will be on the light side again this week, with $3.85 billion coming to market at a time of rising interest rates, poor liquidity, and overall market uncertainty, according to Ipreo LLC and The Bond Buyer.

The Bond Buyer’s long-term weekly yield indexes rose this week as media reports about the possibility of a string of municipal bankruptcies weighed on ­investors.

Tax-exempt money market funds took in new cash for the second time in as many weeks in 2011, gaining $2.098 billion to boost total net assets to $334.26 billion for the week ending Jan. 10, according to the Money Fund Report, a service of iMoneyNet.com.

Most municipal bond exchange-traded funds in the fourth quarter performed noticeably worse than the indexes they were designed to track. Or, depending on your perspective, they performed noticeably better.

Investors kept pulling their cash from municipal bond mutual funds at a record pace last week as frightened money continued to flee the market.

The Northeast will be a focal point of activity this week when the New Jersey Economic Development Authority and the New York City Transitional Finance Authority team up to bring the first two meaty deals of the new year to market.