Answer
The polar water molecules are responding to the charge on the balloon's surface.
Work Step by Step
The balloon is electrically charged. When you place it near the polar water molecules, the charges that are the same sign as the balloon are repelled and shift farther away. The balloon is then attracted to the opposite charges within the water stream that are closer to it, pulling the stream toward itself. The attraction between the unlike charges dominates the repulsion between the like charges, because the unlike charges are closer.
