Muni Inflows Are Highest Since January as Buyers Ignore Fed

  • Investors add to tax-exempt funds for 10th straight week
  • 30-year state and local bond yields lowest since April

Investors added the most money to municipal-bond mutual funds since January in the past week, a sign that they’re not fretting about the Federal Reserve raising interest rates for the first time in almost a decade.

Individuals poured $742 million into tax-exempt funds in the week through Wednesday, Lipper US Fund Flows data show, marking the 10th straight week of inflows. Those investing in long-term and intermediate-term securities received cash, as did high-yield funds.

Benchmark 30-year munis yield 3 percent, the lowest level since April, data compiled by Bloomberg show. Investors are betting that if the Fed tightens monetary policy at its Dec. 15-16 meeting, the longest-maturing tax-exempt debt will fare the best.

Munis have returned 3.2 percent this year, compared with 1 percent for Treasuries and no gain for investment-grade corporate securities, Bank of America Merrill Lynch data show.

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