Markets

MFS Investment Management's Municipal High Income Fund is a gem of consistency. In late December 2010, it was sporting a 4.57% year-to-date return — good enough to lead the average performance of its peers by three-quarters of a percentage point.

Record municipal bond mutual fund redemptions have emerged as a threat to the rally most market participants expected to kick off early next year, as the anticipated slowdown in the supply of new bonds is met with a wave of selling by mutual funds.

The municipal bond market will be asked to digest a single small deal this week as a welcome lull in new supply continues through the holidays.

All The Bond Buyer’s long-term weekly yield indexes declined this week in the wake of Friday’s rally, during three lightly traded sessions in advance of the upcoming Christmas closure.

The tax-free money market fund industry continues to shrink rapidly, squeezing what had been a major source of short-term credit for municipalities and arguably leading to higher borrowing costs for state and local governments.

Municipal credit analysts are spending more time evaluating a risk few used to give much thought to: a municipality's loss of market access for refinancing short-term debt.

Investors continued to ferry cash out of their municipal bond mutual funds at historic rates last week as a tumultuous sell-off sowed fear among buyers.

The flood of new supply that has inundated the municipal bond market the past month will die out this week as issuers take a breather from selling new debt.

The Bond Buyer’s weekly yield indexes increased this week, due largely to substantial weakness on Monday and Tuesday.