Buy side

Analysts are warning that weak investment returns for pension funds are likely to pressure state and local government budgets.

Tax-exempt money market funds lost $2.03 billion -- nearly half of the unusually high bounty they amassed last week – as total net assets dipped to $272.67 billion in the week ended July 16, according to The Money Fund Report, a service of iMoneyNet.com.

The Pittsburgh firm will manage the Massachusetts Municipal Depository Trust bond portfolio, ending Boston-based Fidelity's 35-year run.

Municipal bond mutual funds continue to see strong and growing demand from investors. Even though, the week was marked by modest moves in prices throughout most of the yield curve, money poured into bond funds for the week ended July 18.

Budget balances for states remain too low relative to annual expenditures, according to the National Governors Association and National Association of Budget Officers.

Law firms interested in working on future state of Wisconsin bond sales have until August 6 to submit their qualifications for review.

Morningstar entered the analyst research sector for public finance Monday as it unveiled its fundamental municipal research offering. The research will focus on 100 municipal issuers and reports for about one million muni bonds.

A regulator will allow bond insurer MBIA Inc. to make a payment on surplus notes issued in 2008, the company said.

The outlook for bond-financed transportation infrastructure remains stable, but could possibly see a downturn if the slow economic recovery loses momentum or if banks are downgraded. according to a new mid-year report from Fitch Ratings.

Large issues from Illinois and New York lead the new-issuance charge in the municipal market this week. Total potential volume is expected to climb to $8.14 billion this week.

Municipal market participants are praising rules finalized by the Commodity Futures Trading Commission that except most state and local governments from having to clear interest rate swaps through a derivatives clearing organization.

The municipal market has been fairly energized this week by the simple economics of supply and demand.

In a stunning reversal of recent patterns, tax-exempt money market funds amassed $4.64 billion of new cash as total net assets soared to $274.7 billion in the week ended July 9.

The market continued to show its confidence in municipal bond mutual funds with strong inflows following a holiday week of relative inactivity.

Nearly three-quarters of the tobacco settlement bonds rated by Moody's Investors Service will default if smokers keep up their current pace of kicking or cutting back on their habit, the agency warns in a new report.

With an eye toward expansion, Memphis-based FTN Financial Capital Markets recently brought on six new traders and sales professionals for its muni division.

One analyst is finding opportunity in the intermediate part of the yield curve – where the risk is modest and the rewards are the greatest compared to the short and long ends of the curve, and is also recommending the municipal market overall as a safe alternative at a time of shifting investor sentiment.

Lawmakers and financial market participants sparred over the economic and business impact of the Dodd-Frank Bill and the so-called Volcker Rule, as well as fallout from potential new money market rules.

Top Illinois finance officials are on the road to sell institutional investors on the tidy structure of the state's sale issue next week of $1.5 billion of double-A rated unemployment bonds that are insulated against the state's well-publicized liquidity and budget struggles.