Investors this past week gave the tax-exempt market a big boost of confidence with their heaviest inflows to municipal bond mutual funds since September 2010.

Muni bond funds saw a fifth straight week of inflows, and a ninth week of them out of 10. The week ending Nov. 9 saw $761 million in inflows from muni bond funds that report their flows weekly, according to Lipper FMI.

In the week ending Nov. 2, there were net inflows of $141 million for muni bond funds that report their flows weekly, Lipper reported.

The muni market has seen a large upsurge in new issuance over the past couple of weeks that it has absorbed with relatively little impact to yields, as reflected in the Municipal Market Data triple-A scale. The week’s numbers, though, do not reflect the recent announcement by Jefferson County, Ala., that it filed the largest municipal bankruptcy in U.S. history.

But the response is expected to be rather subdued, industry pros said. Most investors have largely been bracing for grave news from the county for quite some time.

Still, investors well remember how money fled muni bond funds between mid-November 2010 and early June, often by more than $1 billion a week. In the week of Jan. 19, investors in weekly reporting funds withdrew more than $4 billion. But few market pros expect the news from Jefferson County to prompt another such panic.

For the third consecutive week, assets for funds that report their flows weekly rose. They ticked up to $332.7 billion from $332.1 billion the previous week.

The value of the holdings for weekly reporting funds fell by $49.3 million. The week before, they increased by $1.54 billion.

The four-week moving average for all municipal bond mutual funds that report their flows weekly saw a $407 million inflow, up from $238 million the week before.

High-yield muni funds saw a second straight week of inflows this past week, as well as inflows in eight of the past 10 weeks.

Funds that report weekly saw inflows of just $62 million, Lipper said. The previous week, high-yield funds reported inflows of $19 million.

Assets for high-yield funds that report their flows weekly rose for a third consecutive week. They ended at $41.21 billion, up slightly from $41.19 billion the previous week.

The value of the holdings for weekly reporting funds fell by $44 million. Last week, they increased by $223 million.

The four-week moving average for all high-yield muni bond funds that report their flows weekly was a relatively tiny $12.7 million inflow, up from a $3.1 million inflow the week before.

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