Markets

Tax-exempt money market funds lost a sizable $2.09 billion, dropping total net assets to $326.88 billion for the week ending Dec. 13 and erasing nearly all gains from the previous week, according to the Money Fund Report, a service of iMoneyNet.com.

The municipal market has become so turbulent and illiquid that even investors who find tax-exempt yields appealing are sitting on their hands. The recent rout in tax-exempt bonds has some portfolio managers, investors, and dealers beginning to sniff at yield levels that could invite buyers back into the market.

A change in the methodology the Federal Reserve uses to measure who owns municipal bonds has masked the growth in foreign ownership of state and local government debt.

Municipal bond mutual funds are hemorrhaging cash at historic rates due to a fearful investor reaction to the public drubbing of state and local government debt.

More than $10 billion of new volume is expected to arrive in the municipal market this week on the heels of the price stability that followed some volatility last week.

After two weeks of outflows, tax-free money market fund assets recouped some of those losses in the week ending Dec. 6, rising $3.41 billion to $328.97 billion, according to the Money Fund Report, a service of iMoneyNet.com.

The Bond Buyer’s weekly yield indexes increased this week as the absence of an extension of the Build America Bond program in a new tax bill led to two ­consecutive mid-week routs that brought 20-year yields to a 17-month high.

Chicago-based Loop Capital Markets LLC has hired James C. Johnson as its general counsel.