(Bloomberg) -- Investors yanked the most cash out of municipal-bond mutual funds since April 2020 as they brace for Federal Reserve rate hikes as soon as March.

Muni mutual funds saw $1.4 billion withdrawn during the week ended Wednesday, according to Refinitiv Lipper US Fund Flows data. That follows last week’s $239 million outflow, which ended 45 straight weeks of gains.

Investors pulled $454 million from high-yield funds, while intermediate-dated funds lost $158 million from intermediate-dated funds.

With the municipal market heading for the biggest monthly loss since the height of the pandemic-fueled market rout in early 2020, buyers are demanding more in compensation to own debt. Ten-year benchmark municipal bond yields have climbed about 40 basis points since the start of the year to 1.44%, the highest since April 2020, data compiled by Bloomberg shows. 

“We can expect to see more intermittent outflows,” Jeff Lipton, head of municipal credit and market strategy at Oppenheimer & Co., said in a note Wednesday. “Available cash remains plentiful, yet there will likely be a cautionary bias as to its future deployment.”

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