Markets

Cash continues flooding into municipal bond mutual funds as retail investors embrace yields many once scorned as being far too low.

While the seasonal note calendar is in full swing, the dog days of summer are plaguing the long-term bond market.

The Bond Buyer's weekly yield indexes declined this week as municipal yields marched steadily downward, setting new record lows in 10-year munis on a daily basis.

When asked whether municipal bonds can continue their record-setting ways, one of the most common refrains from market participants is: "why not?"

The total assets of tax-free money market funds thinned to $341.34 billion following outflows of $4.99 billion during the week ending Aug. 16, according to the Money Fund Report, a service of iMoneyNet.com.

Retail demand for municipal bonds continued to surge last week as mutual funds that invest in state and local government debt posted their second biggest weekly inflow of the year.

The municipal market is expected to see a mixed bag of state general obligation and revenue financings this week, including two taxable Build America Bond issues for transportation projects, as an estimated $6.86 billion of new long-term volume is slated for pricing amid strong demand, according to Ipreo LLC and The Bond Buyer.

The Bond Buyer’s weekly yield indexes declined during the seven-day period ending Thursday as tax-exempts continued to rally to historical lows.

Tax-free money market funds regained some of their luster the week ending Aug. 9, as total net assets increased by $941.5 million to $346.3 billion, according to the Money Fund Report, a service of iMonetNet.com.