Buy side

Most of The Bond Buyer’s weekly yield indexes increased this week as an earlier sell-off that pushed 30-year yields beyond the 5% threshold outweighed the rally that followed.

Mutual funds have emerged as the dominant source of selling pressure for state and local government paper in the new year as investors keep pulling out their money, forcing fund complexes to sell bonds into an already jittery market.

Volume will be on the light side again this week, with $3.85 billion coming to market at a time of rising interest rates, poor liquidity, and overall market uncertainty, according to Ipreo LLC and The Bond Buyer.

The Bond Buyer’s long-term weekly yield indexes rose this week as media reports about the possibility of a string of municipal bankruptcies weighed on ­investors.

Tax-exempt money market funds took in new cash for the second time in as many weeks in 2011, gaining $2.098 billion to boost total net assets to $334.26 billion for the week ending Jan. 10, according to the Money Fund Report, a service of iMoneyNet.com.

Most municipal bond exchange-traded funds in the fourth quarter performed noticeably worse than the indexes they were designed to track. Or, depending on your perspective, they performed noticeably better.

Investors kept pulling their cash from municipal bond mutual funds at a record pace last week as frightened money continued to flee the market.

The Northeast will be a focal point of activity this week when the New Jersey Economic Development Authority and the New York City Transitional Finance Authority team up to bring the first two meaty deals of the new year to market.

After a wild fourth quarter rife with technical pressures and ­illiquidity, it turns out municipals mostly may have simply been obeying their old master: ­Treasuries.

The Bond Buyer’s weekly yield indexes rose this week in light to moderate secondary trading as activity slowly began to creep back into the market after a holiday lull.

Tax-exempt money market funds started the New Year on a positive note, amassing $3.66 billion in new cash to end the week ending Jan. 3 with $332.16 billion.

No sooner did Build America Bonds become orphaned than they caught fire.

Municipalities will continue their hiatus from borrowing money this week as they are once again slated to sell a meager amount of new debt.

Municipal bond mutual funds coughed up more cash last week as investors continue to take their money out of state and local government debt funds at a record pace.

Tax-free money market funds commanded new money from investors last week — the second straight week of inflows — possibly marking an ebb, or at least a slowdown, to the rush of cash away from money funds the past two years.

Holiday doldrums coupled with a Sunday blizzard that buried much of the Northeast conspired to keep the secondary market very quiet.

MFS Investment Management's Municipal High Income Fund is a gem of consistency. In late December 2010, it was sporting a 4.57% year-to-date return — good enough to lead the average performance of its peers by three-quarters of a percentage point.

Record municipal bond mutual fund redemptions have emerged as a threat to the rally most market participants expected to kick off early next year, as the anticipated slowdown in the supply of new bonds is met with a wave of selling by mutual funds.

The municipal bond market will be asked to digest a single small deal this week as a welcome lull in new supply continues through the holidays.

All The Bond Buyer’s long-term weekly yield indexes declined this week in the wake of Friday’s rally, during three lightly traded sessions in advance of the upcoming Christmas closure.