WASHINGTON Aug 1 U.S. municipal bond funds
reported $2.24 billion of net outflows in the week ended July
31, nearly twice the previous week's $1.23 billion, according to
data released by Lipper on Thursday.
The four-week moving average was negative at $1.56 billion
in outflows, said Lipper, a unit of Thomson Reuters.
Apprehension about municipal bonds helped fuel the 10th week
of outflows, said Tom Roseen, head of research services at
Lipper. When Detroit filed for the largest municipal bankruptcy
in U.S. history, investors began to wonder if there were other
"possible culprits" in the market who could default and pulled
Investors in the municipal bond market also remain worried
the Federal Reserve could end its monetary stimulus program and
create interest rate risk for fixed income, Roseen said, noting
that funds for taxable debt also experienced outflows this week.
"Until people realize they can get better yield than on
Treasuries, we will continue to see outflows," Roseen said about
municipal bond funds.
On Thursday, yields on top-rated 10-years were 2.71 percent
on Municipal Market Data's benchmark scale and highly rated
30-year bonds 4.22 percent.
Ten-year yields were 99.6 percent of comparable Treasuries
and 30-years were 111.9 percent, according to MMD, a Thomson
Reuters company. Because Treasuries are taxed, they typically
have higher yields than tax-exempt municipal bonds and the
ratios showed top-shelf municipal bonds are currently cheaper
Funds that hold high-yield municipal bonds, which usually
have lower ratings, saw outflows of $580.18 million in the week
after $231.71 million in outflows last week, Lipper said.
There were $56.86 million in outflows from exchange-traded
funds, as well, compared with the $10.02 million investors
pulled out of the funds the previous week.
Still, when it came to individual bonds, there was still
appetite, data from BondDesk Group LLC showed. Retail investors
bought 2.2 municipal bonds for every one they sold in the week
ended July 31, the same as the week before. The number of bonds
bought totaled 84,761, while the number of bonds sold was