Municipal bond mutual funds recorded their lightest outflows since May 22, when they last registered inflows.
Funds that report weekly had outflows of $19 million for the period ended Jan. 8, the 33rd straight week of net withdrawals, Lipper FMI numbers showed. They reported outflows of $1.47 billion the
Demand for munis slackened around mid-year as interest rates rose on concern the Federal Reserve would taper its economic stimulus program and Detroit's bankruptcy filing, coupled with concerns over Puerto Rico's economy and fiscal condition, fanned credit worries.
The overall tone for the tax-exempt market has improved in the new year, with yields falling across the curve, and market outperformance against Treasuries.
Assets for all muni funds that report flows fell to $272.4 billion, from $269.1 billion for the week ended Dec. 25.
The value of the holdings for weekly reporting funds rose by $991 million. The previous week they increased by $549 million.
The four-week moving average for all municipal bond mutual funds that report their flows weekly was $1.17 billion of outflows, compared with $1.64 billion of outflows the week before.
Relatively heavy outflows continued for long-term muni bond funds that report flows weekly. They registered outflows of $222 million for the week ended Jan. 8. The week before, those funds reported outflows of $1.23 billion.
High-yield muni bond funds recorded inflows on the week, at $50 million, their first since the week of Oct. 30. The previous week, they reported outflows of $363 million.
Assets for these high-yield funds rose following eight weeks of declines. They jumped to $35.32 billion from $33.72 billion the week before.
The value of the holdings for high-yield funds increased by $179 million, compared with a rise of $142 million the previous week.
The four-week moving average for all high-yield municipal bond funds that report their flows weekly showed $246 million of outflows, versus $365 million of outflows the previous week.
A separate report from The Money Fund Report, a service of iMoneyNet.com, showed a strong start to the new year by tax-exempt money market funds, which posted inflows of $4.86 billion, to lift total net assets to $274.71 billion in the week ended Jan 6.
Mark Krasner, managing editor of iMoneyNet Inc., has said uncertainy and volatility in the stock and bond markets causes investors to park money in tax-exempt money funds until they are ready to make future investment decisions.
Christine Albano contributed to this report.
