Mutual funds

Retail offerings from California and Connecticut led the market Wednesday.

Secondary selling pressure and the larger calendar weighed on the market Tuesday.

Walter O'Connor's decades-long tenure as a municipal bond portfolio manager at BlackRock will come to an end next year. 

Investors added $2.183 billion to municipal bond mutual funds in the week ended Wednesday, following $623.3 million of inflows the prior week, according to LSEG Lipper data.

A possible explanation is that the massive inflows into mutual funds are a parallel move to large inflows into the Capital Group Municipal High-Income ETF, which saw the biggest inflow of a ETF on Friday at $1.5 billion, said Pat Luby, head of municipal strategy at CreditSights.

As the end of the first half of a so-far tumultuous 2025 approaches, several municipal bond analysts are upbeat about the rest of the year.

"These are the types of products that financial advisors are asking to see from us," said First Eagle's John Miller.

With higher yields and ratios, many participants say investors should be taking advantage of current levels.

"The discussion about policies regarding tariffs will drive performance in bonds over the next three to six months," said Michael Pietronico, CEO of Miller Tabak Asset Management.

Following Wednesday's selloff, muni yields were cut even further, with yields rising up to six basis points, depending on the scale. Meanwhile, UST yields rose two basis points out long.