Municipal bonds traded weaker in every session this week as most primary deals were priced cheaply to attract buyers while secondary sellers on longer-maturing bonds pushed rates higher.

"The week can be characterized as watching interest rates rise and grind upward," said Richard Ciccarone, chief research officer at McDonnell Investment Management. "A continuation of a trend we've seen throughout 2013 is outflows from funds. There is a strong correlation between a prolonged interest rate increase and outflows. So as long as interest rates are poised to go upward, outflows could accelerate."

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