Buy side

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.

The municipal bond market is gearing up for what it expects will be a strong primary this week.

Municipal issuers are gearing up to sell more than $9 billion of new issuance this week -- dominated by a $2.9 billion Texas transportation offering -- and hope their financings benefit from the momentum of the previous two trading sessions.

Inexpensive prices on new issues lured buyers back into the marketplace as municipal bond market resumed its slump during the past week.

The Bond Buyer's weekly yield indexes rose the week ended July 11.

Investor demand for tax-exempts remained tepid as outflows from muni bond funds for the week of July 10 accelerated to $1.2 billion from $870 million the prior week.

Following last month's historic sell-off, the municipal market offers solid fundamentals and the most compelling value since 2011, additionally bolstered by the strong demand from July and August reinvestments and the demand from crossover buyers, BlackRock Inc. said in its July municipal report.

A $700 million Denver Airport System financing and a $634 million California Health Facilities Financing Authority sale will dominate the primary market this week as more than $6 billion greets investors returning from a long holiday weekend that may be ready, willing, and able to reinvest July 1 cash after a short hiatus.

Modest inflows of $903.9 million crept back into municipal money market funds as total net assets inched up to $262.38 billion in the week ended July 1, according to The Money Fund Report, a service of iMonetNet.com.

Early indications of July 1 reinvestment appeared mediocre this week as investors took a much-need break from the municipal market – some preoccupied by the Fourth of July holiday and Friday's June employment figures, others still reeling from the volatility of the historic sell-off two weeks ago, municipal players said.

The recent market selloff battered municipal bonds unevenly, as those investors holding credits with higher coupons fared the best.