Buy side

In what was the first sizable inflow activity in nearly a month, tax-exempt money market funds increased by $1.94 billion as total net assets grew to $270.25 billion for the week ended Sept. 10, according to The Money Fund Report, a service of iMoneyNet.com.

Municipal bond mutual funds saw $820 million in inflows into funds that report their flows weekly for the week ended Sept. 12.

Light supply and a perceived hesitation on investors' parts conspired to hold the municipal market to only modest outperformance against Treasuries this week.

MBIA Inc. is fielding a new law suit and Assured Guaranty is seeking an additional credit rating.

Moody's Investors Service Tuesday repeated a threat to downgrade the United States sovereign debt rating.

The recent Berkshire Hathaway trade, sound technicals and a recent industry move to standardize contracts might increase interest in muni credit default swaps, which has suffered from apathy on the part of investors and a lack of price volatility to attract traders.

After plunging during the financial crisis, the issuance of municipal bonds subject to the alternative minimum tax is slowly rebounding, with airports leading the way.

The municipal market outperformed the Treasury market on this sluggish holiday week by largely recording less significant backups in yields. Muni bond indexes were mixed, though mostly higher.

Flows into municipal bond mutual funds remained positive. Barely. Those funds that report their flows weekly saw $260 million of inflows for the week ended Sept. 5.

Tax-exempt money market funds lost $1.70 billion and total net assets declined to $268.31 billion in the week ended Sept. 3 -- the second consecutive week of significant losses, according to The Money Fund Report, a service of iMoneyNet.com.

This week will be short on days and, yet again, slight of issuance for the municipal bond market. Industry calculations hold that muni bonds expected to be sold this week should total $1.89 billion, versus a revised $2.18 billion million last week.

Long-term municipal bond volume last month easily outstripped that of the same period in a relatively issuance-starved August 2011.

Van Eck Global will soon unveil an addition to its current municipal exchange-traded fund line-up, as the firm has filed with the Securities & Exchange Commission to launch the Market Vectors Short High-Yield Municipal Index ETF.

Memphis-based, fixed-income broker-deal Carty & Co. has expanded its new public finance division into Alabama, with an eye toward other states in the Southeast.

Many market participants may be on vacation, but there's still interest in municipal bond mutual funds. Flows to muni bond funds rose on the week, keeping their hot streak alive.

The municipal market may have been in holiday mode this week, but there has been noticeable activity by institutions in the secondary, traders reported. The week's light issuance in the primary market was well received, as demand remained robust for tax-exempts.

BondDesk Group LLC has appointed former UBS head of municipal trading John Bagley as president and senior managing director of BondDesk Trading.

Tax-exempt money market funds saw the return of significant losses this week -- despite gaining some modest inflows last week -- as $2.45 billion fled the funds and total net assets settled at $270.01 billion in the week ended Aug. 27, according to The Money Fund Report, a service of iMoneyNet.com.

Credit spreads on Puerto Rico's general obligation bonds have widened by as much as 70 basis points from the beginning of the year, while similarly rated bonds have seen spreads narrowing.

Demand for municipal bonds remains robust heading into the Labor Day holiday weekend even if expected issuance does not. Industry estimates hold that municipal bonds to be sold next week should total a paltry $1.55 billion, versus a revised $6.38 billion last week.