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.

The slowdown of growth in the fourth quarter does not imply there is dwindling demand for munis, said Pat Luby, head of municipal strategy at CreditSights.

While UST yields rose up to five basis points out long Thursday, the current rally "that has taken the 30-year UST closer to where the 10-year yield traded a week ago has not impacted the same range in munis," said Kim Olsan, senior fixed income portfolio manager at NewSquare.

Investors added $546.3 million to municipal bond mutual funds in the week ending Wednesday, following $238.5 million of inflows the prior week, according to LSEG Lipper data.

Investors added $238.5 million to municipal bond mutual funds in the week ending Wednesday, following $1.124 billion of inflows the prior week, according to LSEG Lipper data.

Muni yields were bumped one to eight basis points, depending on the scale, while UST yields fell three to 10 basis points, with the greatest gains out long.

Investors added $2.028 billion to municipal bond mutual funds in the week ending Wednesday, following $251.7 million of outflows the prior week, according to LSEG Lipper data.

Issuance was led by a $2 billion retail pricing from the University of California in the negotiated market and a $1.2 billion competitive deal from Washington.

There are eight municipal bond interval funds, three of which launched last year, promising fewer liquidity constraints and the potential for higher returns.

Munis "responded in part to a better UST session [Wednesday] but weren't in a position from a supply standpoint to attempt to match the 10-15 basis point rally in taxables," said Kim Olsan, a senior fixed income portfolio manager at NewSquare Capital.

The muni market also faces an elevated new-issue calendar, which may put additional pressure on muni yields. Bond Buyer 30-day visible supply sits at $17.57 billion.