Buy side

The municipal market may stabilize in the coming week, helped by a calendar that is moderate in size, diverse in composition and rich in familiar and attractive names, market watchers say.

Bold headlines from Detroit's bankruptcy filing and Chicago's downgrade provided strong drivers for the ninth straight week of outflows from municipal bond mutual funds, at $1.23 billion.

The Bond Buyer's weekly yield indexes increased the week ended July 25.

Investor demand for tax-exempt money market funds withered, as the industry registered another $475.3 million in outflows.

Many large managers of municipal bond funds with Detroit paper said they haven't heard any panic from their investing clients since the city filed for bankruptcy and many of their funds have lost value.

Volume in the new-issue market this week will slow to $5.54 billion, down from the robust pace of last week when municipals weakened under heavy supply.

Detroit bankruptcy, substantial outflows, heavy calendar, Ben Bernanke, economic indicators -- the municipal market had a wealth of drivers vying for influence on yields this week.

The municipal market started Friday unaffected by Detroit's Chapter 9 bankruptcy filing Thursday afternoon, the biggest in history.

Heavy outflows, at $1.56 billion, endure for municipal bond mutual funds as investor demand for tax-exempts continues to flag.

The Bond Buyer's weekly yield indexes were narrowly mixed the week ended July 18.

Municipal bond mutual funds continue to hemorrhage money as investor demand remains low.

Robust activity, largely driven by new issuance, propelled the municipal market through Thursday.

Tax-exempt money market funds suffered $852.6 million in outflows, offsetting part of the previous week's gain, as total net assets dipped to $265.13 billion in the week ended July 15, according to The Money Fund Report, a service of iMoneyNet.com.

The Bay Area Toll Authority will come to market with its first new money deal in three years, selling $750 million in subordinate toll revenue bonds.

Federal Reserve Chairman Ben Bernanke has spoken. But the municipal market, after a period of buying Wednesday morning, has stabilized as the session crossed into the afternoon.

Tax-exempt yields started Wednesday's trading session lower in reaction to comments Federal Reserve Chairman Ben Bernanke made to Congress regarding the status of the accommodative monetary policy currently in place.

Activity in the municipal market has picked up as some of the week's calendar arrives, providing an overall tone of strength.

The municipal market sauntered out of the gate Tuesday as participants expect the large calendar to set the tone for the week.

Municipal market participants continue to hold off in preparation for the large new-issue calendar.

Two Basel III rule changes regulating government agencies adapted recently to the U.S. markets are likely to damp interest in municipal bonds as investments for large banks.