Mutual funds

This week kicks off a flip of calendar to the final month of the summer reinvestment season and one of the larger new-issue calendars of the year.

Municipal bond mutual fund saw inflows with Refinitiv Lipper on Thursday reporting investors added $552.219 million to funds for the week ending Wednesday following $1.040 billion of outflows the previous week.

The Investment Company Institute reported investors pulled $136 million from municipal bond mutual funds in the week ending June 28, after $338 million of inflows the previous week.

Municipal bond mutual fund inflows returned as Refinitiv Lipper reported investors added $672.288 million for the week ending Wednesday following $256.532 million of outflows the week prior.

Federal Reserve data shows that retail ownership of municipals rose $58.8 billion, or 3.7% quarter-over-quarter, to $1.67 trillion. Bank ownership fell in the first quarter by $13.3 billion.

Outflows continue as Refinitiv Lipper reported investors pulled $1.345 billion from municipal bond mutual funds for the week ending Wednesday.

"Ultimately, the case for fixed income generally, and munis specifically, is much stronger today than it was a year ago," said Nick Vendetti, municipal bond fund portfolio manager with Allspring Global Investments.

"Steep corrections occurring inside 10 years on the curve reflect an ongoing process to reduce a deep inversion," said Kim Olsan, senior vice president of municipal bond trading.

Outflows were seen again from municipal bond mutual funds, though they lessened this week as Refinitiv Lipper reported $101.664 million was pulled as of Wednesday.  

Outflows from municipal bond mutual funds intensified as Refinitiv Lipper reported $846.116 million was pulled from them as of Wednesday after $92.055 million of outflows the week prior. 

Even though yields have moved to higher ground, some participants say that even cheaper levels are needed to bring about more retail conviction. Muni-to-UST ratios are still rich.

For the week ending Wednesday, outflows intensified as Refinitiv Lipper reported $255.794 million was pulled from municipal bond mutual funds after $91.713 million of outflows the week prior. High-yield saw inflows.

The value of the municipal bond market decreased by 4.3% in the third quarter of 2022, said Pat Luby, a strategist at CreditSights.

"This week will likely have been the last active week of the year, but it turned out to be quite eventful," according to Barclays PLC.

Outflows returned as Refinitiv Lipper reported $1.217 billion was pulled out of municipal bond mutual funds for the week ending Wednesday after $46.912 million of inflows the week prior.

The Fed chairman said he believes the Fed is getting close to a sufficiently restrictive level, but they're not quite there. While two good inflation reports are good, "there's still a long way to go to price stability."

Refinitiv Lipper reported $46.912 million was added to municipal bond mutual funds for the week ending Wednesday after $1.394 billion of outflows the week prior.

"Yield curve inversion deepens and nears a four-decade low which is clearly setting up this economy for a recession that won't be a mild one," OANDA's Edward Moya said.

"Munis are poised to continue this rally into December as we can end 2022 on a high note and close out the worst-performing year on record for munis," said Jason Wong, vice president of municipals at AmeriVet Securities.

Munis saw the best performance in November in decades, with the asset class ending in the positive by 4.68%. The MSRB reported that trading volume reached another record in November, with 1.29 million municipal trades.