Demand, as represented by muni bond mutual fund flows, fell as $261 million poured out of weekly reporting funds for the week of March 20, Lipper FMI numbers showed. For the week of March 13, the market saw outflows of $113 million.
The market digested another heavy calendar this week without appreciable price moves. Large issuance from the New Jersey Turnpike Authority and the New York City Transitional Finance Authority were reasonably well-received, traders said.
In addition, the Federal Open Market Committee announced its decision to maintain downward pressure on long-term rates and a buffer for the mortgage market by continuing to buy long-term and mortgage-backed securities, in effect keeping short-term economic policy unchanged.
Muni yields, like those of its Treasury brethren, strengthened beyond the front end of the curve, Municipal Market Data showed. The triple-A 10-year yield since last Friday dropped five basis points to 1.95%.
The 30-year fell four basis points over the same period to 3.10%. The two-year held steady at 0.31% for a 23rd consecutive session.
As Treasury yields outperformed on the intermediate and long ends of the curve, so muni ratios to them ticked higher. While the 10-year remains a shade over 100%, the 30-year continues to hover slightly under the mark, at 98%. The two-year, meanwhile, landed at 119% over the span.
Assets for all muni funds that report their flows weekly rose for the first time in three weeks to $325.4 billion. The week prior, they reported $324.1 billion.
The value of the holdings for weekly reporting funds ticked up by $64 million. The week before, they plummeted by $1.39 billion.
The four-week moving average for all municipal bond mutual funds that report their flows weekly was $37 million of outflows, falling from $101 million in inflows the week before.
Long-term bond funds that report their flows weekly saw heavy outflows for a second straight week at $244 million. Still, that represented an increase from the $444 million of outflows they reported the week before.
High-yield muni funds also reported outflows for the third consecutive week. For most of 2012 and 2013, flows were and have been positive.
High-yield funds that report weekly saw $37 million in outflows, Lipper said. The previous week, they reported $83 million in outflows.
Assets for high-yield funds that report their flows weekly fell for the second straight week to $45.25 billion, down from $45.29 billion the week before.
The value of the holdings for weekly reporting high-yield funds fell by $863,000. Last week, they decreased by $213 million.
The four-week moving average for all high-yield municipal bond funds that report their flows weekly showed $13 million of outflows, falling from almost $7 million of inflows the week before.