Buy side

June, traditionally a strong month for municipal bond issuance, provided more bad numbers in a difficult period for the market. Long-term muni bond volume for June plunged 46.5% from the same period in 2012.

After the selloff municipal strategists preparing for the start of the third quarter were torn between taking advantage of buying opportunities and being ultra conservative to protect assets from future weakness.

The muni market, reeling from one of the worst selloffs in 25 years this week, witnessed record-breaking outflows to muni bond funds of $4.53 billion for the week of June 26.

The Bond Buyer's weekly yield indexes posted pronounced losses the week ended June 27, reflecting the market selloff.

Municipal bond mutual funds that report flows weekly recorded $4.53 billion in outflows for the week of June 26, Lipper FMI numbers showed, after $2.22 billion of outflows reported the previous week.

Tax-exempt money market funds had outflows of $314.7 million in the week ended June 24, decreasing total net assets to $261.48 billion, according to The Money Fund Report, a service of iMoneyNet.com.

Falling yields for single-A and triple-B bonds with longer maturities on Tuesday signaled the municipal market was ready to pause after one of the heaviest selloffs in more than two decades.

Current tax-free yields are attractively priced compared to Treasuries, creating opportunity for municipal investors, says Alan Schankel of Janney Capital Markets.

Municipal bond investors, spooked that interest rates' climb from record lows is accelerating, continue to pull money from the market in record-breaking droves.

The Bond Buyer's weekly yield indexes increased significantly the week ended June 20.

Tax-exempt money market funds' inflows slowed to $819.6 million in the week ended June 17 after a $3.13 billion surge the week before, according to The Money Fund Report, a service of iMoneyNet.com.

Life insurance companies' interest in municipal bonds has grown dramatically over the past several years, as their holdings have more than tripled since 2007.

Households remained the biggest owners of municipal bonds in the first quarter of 2013 while mutual funds and U.S. chartered depository institutions increased their share of the $3.7 trillion market, quarterly data from the Federal Reserve Board showed.

Volume will inch higher this week as issuers are expected to bring an estimated $6.40 billion of new volume to the primary market led by sizable offerings that include a California health care offering, a New York water sale, and a Texas airport financing.

The amount of money investors have withdrawn from municipal bond mutual funds, at $1.61 billion for the week of June 12, continues to climb and break records for the year.

Citi strategists released a report saying they do not expect municipal bond yields to continue to climb, although the road to stabilization will not be smooth.

After weeks of either net outflows or only modest inflows, tax-exempt money market funds recaptured $3.13 billion of net gains as total net assets grew to $260.97 billion in the week ended June 10, according to The Money Fund Report, a service of iMoneyNet.com.

A difficult May in the municipal bond market has put investors on the defensive.

Roberto Roffo, a 20-year asset management veteran, has joined Advisors Asset Management as a senior vice president and portfolio manager as the firm plans to enhance its tax-exempt management initiatives.

Slowly rising Treasury yields and modest activity are pulling muni yields higher as the day's trading session crossed the halfway point.