Investors retained their interest in municipal bond mutual funds this week, despite a steep backup in tax-exempt yields.
Demand that persisted throughout much of the year subsided enough this week as robust supply reached the market. Investors sent money to muni bond mutual funds for a sixth consecutive week, though at a decreased pace.
Funds that report their flows weekly recorded inflows of $311 million for the week ended Dec. 5, Lipper FMI numbers show. That’s down from the week ended Dec. 5, which saw inflows of $489 billion from weekly reporting funds.
For context, muni bond mutual funds have recorded their 63rd week of positive flows in the past 67 weeks.
Triple-A tax-exempt yields jumped as much as 18 basis points in the belly of the curve, Municipal Market Data numbers show. The sell-off lifted levels above the record territory at the 10-year and 30-year parts of the curve they occupied for much of last week.
Assets for all muni funds that report their flows weekly fell for the first time in 12 weeks to $324 billion, from just under $325 billion the week before.
The value of the holdings for weekly reporting funds was negative for the first time in eight weeks, falling by $1.25 billion. The week before, it rose by $922 million.
The four-week moving average for all municipal bond mutual funds that report their flows weekly was $604 million of inflows, down from a $702 million gain the week before.
Long-term bond funds that report their flows weekly again reported strong inflows, to the tune of $364 million. This represented a small increase from the $337 million of inflows they reported the week before.
High-yield muni funds also saw inflows for the week. Flows have been positive for 51 of the previous 55 weeks.
High-yield funds that report weekly saw $168 million in inflows, Lipper said. The previous week, they reported $212 million in inflows.
Assets for high-yield funds that report their flows weekly increased to almost $45.07 billion, up a smidge from $45.06 billion the week before.
The value of the holdings for weekly reporting high-yield funds fell by $152 million. Last week, they rose by $246 million.
The four-week moving average for all high-yield municipal bond funds that report their flows weekly was $189 million of inflows, dropping slightly from $193 million the week before.