Buy side

Refundings have dominated the new supply of municipal bonds so far in 2012. They've been driving up demand by taking higher coupon bonds out of the market.

The finances of local and state governments and other muni sectors generally improved from 2010 to 2011, according to McDonnell Investment Management, LLC.

New Rule G-43 requires that broker's brokers make reasonable efforts to obtain fair and reasonable prices when conducting secondary-market "bid-wanted" auctions.

In the aftermath of Moody's Investors Service downgrade of several key U.S. banks late Thursday, it downgraded roughly $64 billion in affected municipal debt Friday afternoon.

At an anticipated $8.11 billion, municipal bond issuance this week should subside slightly. But because investors are neck-deep in heavy cash flows, the market has been absorbing healthy calendars over the past few weeks with only modest concessions to yields.

Mary Schapiro, chairman of the Securities and Exchange Commission, laid out a case for additional money market reforms before the Senate Banking Committee Thursday.

Moody's Investors Service downgraded several key U.S. banks late Thursday, possibly impacting municipal bonds.

Muni bond indexes were mixed on the week as the need to put truckloads of reinvestment money to work pushed investors to buy munis even while yields sat at barrel-scraping levels

The tax-exempt money market sector saw a moderate decrease in cash in the week ended June 18 as $801.2 million exited the funds and total net assets settled at $271.40 billion, according to the Money Fund Report, a service of iMoneyNet.com.

After amassing $555 million of inflows for the week ended June 20, muni bond mutual funds that report their flows weekly have now seen inflows for 10 consecutive weeks.

Morningstar, Inc. will soon enter the municipal bond research business. It plans to offer credit quality and price discovery products and services on the municipal market to registered reps, asset managers, banks and insurance firms likely over the next three months.

A 39% plunge in the median net worth of U.S. families is a credit negative for state and local governments and higher education, Moody's Investors Service stated.

Additional regulation of money-market mutual funds could increase short-term borrowing costs for state and local governments, leading municipalities to raise taxes or cut spending on infrastructure and other critical projects, according to a paper released Monday by a Georgetown University professor.

The municipal bond market expects another reasonably healthy week of new issuance. The Massachusetts Building Authority leads the charge with an expected pricing of $750 million of sales tax refunding bonds.

Jim Swanson, chief investment strategist at MFS Investment Management, shared his views on the muni market in 2012's second half, legislative issues affecting the market, overall volume and his prognosis on mutual fund flows and performance.

Municipal bond mutual funds continued their hot streak. As the market saw modest firming on the week, muni bond funds saw inflows for a ninth consecutive week.

The municipal bond market emerged from a week of heavy issuance somewhat stronger past the front end of the yield curve.

Tax-exempt money market funds gave up the inflows they accumulated last week — and then some — when they lost $1.45 billion and total net assets dropped to $272.20 billion in the week ended June 11, according to the Money Fund Report, a service of iMoneyNet.com.

Despite Treasury outperformance and cheap ratios to municipal bonds, crossover buyers are keeping their distance from the tax-exempt market.