Markets

At least one demographic is yet to trumpet the end of the recession: local governments.

The Bond Buyer’s weekly yield indexes rose this week amid a heavy onslaught of new issuance, mainly out of California, and a mostly unchanged secondary market.

Tax-exempt money market funds inched down further again this week, dropping $2.74 billion to $412.22 billion for the week ending Nov. 2, according to the Money Fund Report, a service of iMoneyNet.com.

The secret may be out. Municipal closed-end funds are unique and compelling because they give investors the opportunity to buy a basket of municipal bonds at a discount from market value.

The cascade of cash washing into municipal bond mutual funds all year picked up again last week, suggesting the dip in new money in mid-October may have been a blip.

After digesting a revised $7.67 billion in new volume last week, the municipal market will face an estimated $9.59 billion this week, according to Ipreo LLC and The Bond Buyer, as the California market again takes center stage — this time with a $1.5 billion sale of general obligation bonds catering to retail investors.

Assets of tax-exempt money market funds declined by $2.93 billion and ended at $414.96 billion for the week ending Oct. 26, according to the Money Fund Report, a service of iMoneyNet.com.

When taxable Build America Bonds were introduced to the market in April, one attraction for issuers was said to be the wider investor base they would garner, in contrast to the limited market for traditional, tax-exempt municipal bonds. But while BABs have been successful in expanding liquidity in the muni market, purchases from abroad remain relatively shallow.

The Bond Buyer’s weekly yield indexes rose this week amid light trading in the secondary market, as a flood of issuance in the new-issue market captured participants’ attention and focus.