Municipal bond fund flows turned positive this week after outflows for the last two weeks.
Fund flows rose to $273.8 million for the week ending April 10, according to Lipper FMI. This is the largest inflow in seven weeks, since $320 million came in the week ending Feb. 19.
"This was the first positive print for muni funds in three weeks as seasonal seasonal tax time pressure produced net outflows of $81 million last week and $212 million in the week prior," Chris Mauro, CFA at RBC Capital Markets, wrote in a report released on Friday.
Fund flows turned negative the week ending March 26, the first report after Federal Reserve Yellen Janet Yellen said during a March 19 press conference the Fed might raise interest rates sooner than analysts anticipated.
The four-week moving average remained barely positive at $9.4 million, compared with positive $54.6 million the previous week, Dorian Jamison, municipal analyst at Wells Fargo, wrote in a report released on Thursday.
"As has been the case all year, the pop in muni flows this week was almost entirely driven by heavy inflows into municipal high yield funds," Mauro wrote in the report. "These funds posted $323 million in inflows this week compared to the $186 million in inflows reported last week, making the week of April 9 the 14th consecutive week of high yield inflows."
Supply for the upcoming holiday week drops again, resorting back to the light issuance trend of 2014.Next week's total potential volume is scheduled to be about $2.6 billion, down $1.8 billion from this week's issuance of $4.4 billion.
Municipal bond yields strengthened Friday morning, with bonds maturing from 2019 through 2037 decreasing as much as four basis points. Yields on bonds maturing beyond 2038 fell as much as three basis points, while those on the short end are under review, according to the Municipal Market Data triple-A scale.
Treasuries strengthened Friday morning, with the 30-year yields advancing three basis points to 3.49% and the 10-year benchmark gaining by two basis points to 2.63%. Two-year notes rose one basis point to 0.36%.
