Mutual funds

The Investment Company Institute reported investors added $1.090 billion from muni bond mutual funds in the week ending June 1, up from $4.367 billion of outflows in the previous week.

Investors will be greeted Monday with an increase in supply with the new-issue calendar estimated at $6.488 billion, led by $1 billion-plus of GOs from Maryland in the competitive market.

High-yield raked in the majority of the flows helped by Nuveen reopening two of its high-yield funds to new investors. Participants remain cautious as macroeconomic effects still hang over the market.

Municipals posted gains for the first time in 2022 in May, outperforming U.S. Treasuries on the month. The Bloomberg Muni Index posted a 1.49% return in May bringing losses down to 7.47% year to date.

After nine months of a soft closure, two Nuveen high-yield mutual funds will resume accepting purchases from new investors in the face of improved market conditions.

The rapid swing to lower yields over the past week has led to a sunnier outlook for the summer reinvestment season, but uncertainties on the economic front, rate volatility, and supply questions hang overhead.

Municipals improved for the fifth session in a row with 10- and 30-year triple-A yields falling 30 basis points since Thursday. Connecticut priced $1 billion-plus of GOs and saw yields lowered in a repricing.

On the buy-side, weakness, outflows, supply issues, and poor liquidity are making life challenging for municipal bond investors. The same could be said for issuers.

Deep-in-the-red municipal returns are not helping assuage investor concerns, creating a negative feedback loop that has yet to see a pause.

Investors pulled more from municipal bond mutual funds in the latest week, with Refinitiv Lipper reporting $2.446 billion of outflows, though that was down from $2.669 billion of outflows in the previous week.