The torrential downpour of cash upon municipal bond mutual funds has eased to mere rainfall.
Investors entrusted $774.3 million to muni funds that report their figures weekly during the week ended June 17, according to AMG Data Services.
Though this is in the top 10% of weekly flows since the early 1990s, it is well off the pace of $1 billion weekly flows in May and early June.
This figure excludes certain fund families that report figures monthly. All funds, including these families, have been reporting inflows of $1.74 billion a week based on a four-week moving average.
That is off the record pace of $1.83 billion a week set in late May and matched two weeks ago. The current pace would have been a record until this year.
Funds have reported $23.36 billion in inflows this year, meaning they could attract no new money for the rest of the year and still have the third-best annual inflow since 1992, according to AMG Data.
The record for inflows in a year is about $28.6 billion, set in 1993. At this point in the year in 1993, funds had attracted 25% less cash than funds have so far this year.
The average annual inflow since 1992 is $7.4 billion. The median is $9.65 billion.
The story this spring has been the unwinding of risk-intolerant positions.
During the peak of the credit crisis, investors flocked to Treasury bonds, which are perceived as the world's safest haven. The yield on the 10-year Treasury collapsed from 4% in mid-October to barely more than 2% in December.
As investors became more willing to stomach risk, they sold Treasuries and put the cash in riskier spots, pushing the yield on the 10-year to 3.8% last week.
Another symptom of risk tolerance has been the exodus of cash from money market funds, which offer unassailable safety and minimal yield.
According to EPFR Global, the $55 billion in outflows from money market funds last week was the greatest since at least 2006. More than $160 billion has fled money funds this year.
Aside from flows into muni funds, this is reflected in numerous ways.
The Standard & Poor's 500 index, though off 3% in the week measured in this report, is still up 36% since March 9.
A commonly used gauge of market volatility known as the VIX is down to about 30 from a peak of more than 80 in the fourth quarter last year.
Rivers of cash have flooded mutual funds of all stripes, from commodities to stocks to bonds.
The price of a barrel of oil has zipped past $70, from well below $40 earlier this year.
Inflows, plus $23.28 billion in market appreciation this year, have lifted municipal funds' assets to $395.08 billion, the third-highest level ever.
Funds are just $2.5 billion off the all-time record of $397.55 billion set in September. A single week with $2.5 billion in asset gains is not unheard of. It has happened nine times this year, as recently as June 3.