July 18 Investors pulled a net $1.56 billion from U.S. municipal bond funds in the week ended July 17, the eighth straight week of net outflows and the largest in three weeks, data from fund-tracking firm Lipper showed on Thursday.
The week's withdrawals were up 30 percent from the previous week, when $1.2 billion was redeemed. It marked the most withdrawn since the week ended June 26, when a record $4.53 billion was pulled from the sector.
Investors have pulled just over $2 billion a week from muni funds over the past four weeks on average, according to Lipper, a unit of Thomson Reuters.
High-yield muni funds had outflows of $246.3 million in the latest week, up from $207.1 million of outflows the previous week. Exchange-traded muni funds incurred $63.1 million of outflows, after $115.75 million of outflows in the prior week.
The withdrawals coincide with investor anxiety across fixed-income markets in response to signals from the U.S. Federal Reserve that it could soon start scaling back on its massive stimulus program, known as quantitative easing.
The Fed has been buying $85 billion a month of U.S. Treasuries and mortgage-backed securities, which had helped drive bond yields lower and stoked demand for related assets such as munis. Muni bonds are popular with individual investors because the majority of them are exempt from federal and state income taxes.