(Bloomberg) — Municipal-bond mutual funds saw outflows resume for the fourth week this year, with investors pulling about $1.3 billion in the week ended Wednesday, according to Refinitiv Lipper US Fund Flows data.
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The exodus comes after the previous week’s gain of $216 million. High-yield funds also saw one of their biggest outflows on record. The prospect of Federal Reserve rate hikes next month, as well as growing geopolitical uncertainty, is sidelining some investors.
“Until more certainty and stability return to the markets, which admittedly could take some time, we expect to see continued episodic outflows,” Jeff Lipton, head of municipal credit and market strategy at Oppenheimer & Co., said Thursday. “But again, even though we do not foresee the consistently active deposits of 2021, we are not expecting an extended period of sustained and swelling cash withdrawals.”
Benchmark 10-year muni bonds are yielding 1.67%, climbing about 70 basis points since the end of December, data compiled by Bloomberg show.
Investors pulled $776 million from high-yield funds, the 14th largest weekly outflow, while intermediate funds lost $114 million.
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