Investors put slightly more money into municipal bond funds than they took out in June, according to figures released yesterday by the Investment Company Institute.

But municipal investors with exchange privileges allowing them to swap into other areas such as junk and government bonds, stocks, or money market funds, proved slightly more willing to leave municipals, ICI spokesman John Collins said. "June was essentially a month of more sideways movement than primarily up and down," Collins said. Overall, however, June showed little change in investor sentiment from the previous month, he said.

"The caution that investors have been exhibiting for several months is still in the market," Collins said.

ICI figures for June show that gross sales of municipal bond fund shares were up slightly for both the national group, also known as the long-term municipal bond fund group, and the single state group, Collins said.

For the national group, gross sales totaled $2.18 billion in June, up from $1.97 billion in May. For the single state group, June sales totaled $1.59 billion, up from $1.56 billion for May.

Redemptions from national funds totaled $1.80 billion in June, down from $1.86 billion in May. Redemptions from single-state funds totaled $1.20 billion, down from $1.3 billion.

As for exchanges between funds, exchanges into the national funds in June totaled $1.38 billion, down nominally from May. In June, $746.9 million came into single state funds, down from the $799.3 million that came in during the preceding month.

Exchanges out of national funds totaled $1.89 billion in June, up from $1.54 billion in May. Exchanges out of single state funds totaled $896.8 million, down from $955.6 million.

Taking into consideration inflows, outflows and swaps, as well as market price changes, national funds had assets of $131.7 billion at the end of June, while single state group assets totaled $107.6 billion, according to ICI figures. The totals are down slightly from May, when the national group had $133 billion in assets, and single state funds had $108.3 billion.

Asked about cash flows at his funds, one buysider who preferred anonymity replied: "Out of five funds, we had three with positive cash inflows, one about breakeven, and one still seeing negative flows."

In secondary activity yesterday, municipals gained 1/8 overall as participants waited for today's report on growth in second-quarter gross domestic product.

Yields on high-grade issues improved by two basis points overall, Dollar bonds ended flat, after being down in the morning. Activity was light to moderate. Some selling was also noted, with bid lists totaling $300 million to $350 million.

In debt futures, the September municipal contract closed up more than 1/2 point at 90 26/32s. Yesterday's September MOB spread was negative 390, compared to negative 387 on Wednesday.

Treasuries ended higher yesterday as the U.S. dollar, in late trading in New York, broke the 100-yen barrier for the first time since June. The 30-year bond closed up nearly 5/8 point to yield 7.54%. Governments rebounded from a morning deficit following a report that first time claims for unemployment insurance dropped by 59,000 in the week ended July 23. The figure is the lowest since March 26.

A municipal trader said that some of yesterday's gains could be attributed to short covering ahead of today's GDP report. The trader added that he doesn't think the GDP figure will be "a Fed buster."

"I don't think that it's this number that makes them do it," he said, referring to the possibility of another tightening of credit by the central bank. The GDP report covers the second quarter, and the second quarter is history, he said.

"I think that we've had some numbers here over the past month that have shown some slower growth and some faster growth, so it's a mixed bag," the trader said.

What would more likely prompt a Fed tightening would be portents of future inflationary pressures, he said. The trader said the Fed is more likely to tighten on next Friday's July employment report.

"That's more likely because we know that is a statistic [Federal Reserve Chairman Alan Greenspan] pays a lot of attention to," he said.

Stephen Malfitano, a managing director at Cowen & Co. said he and a growing number of others believe that, at this point, a 50-basis-point increase in short-term rates tightening in monetary policy has the potential to benefit long-term rates.

"The idea is that it would dampen future economic growth, and relieve inflationary expectations," Malfitano said. PAWs Revisited

Former California state treasurer Tom Hayes yesterday blasted current treasurer Kathleen Brown's handling of last week's $4 billion revenue anticipation warrants sale. Hayes' comments were contained in a press release issued by the Governor Pete Wilson committee. Brown is challenging Wilson in the November election.

"These warrants were nearly issued as taxable debt, which would have cost investors millions of dollars, surely subjected the state to costly lawsuits, and jeopardized California investments for years to come," Hayes said in the release.

Though Brown's office was formulating a response, it could not be obtained by press time.

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