The tax-exempt market opened on a quiet note Tuesday morning as traders said activity was slow to start.
"It's very slow," a Pennsylvania trader said. "It still feels heavy from the end of last week. Monday was heavy and I don't think muni scales were cut as much as they should have been. From what I can tell, I sense it's weaker than where the scales are."
While the market feels weaker, this trader said there was a lack of activity.
The market should pick up later in the afternoon with the week's primary deals pricing. The Pennsylvania trader said the $1.5 billion JobsOhio Beverage System priced for retail Monday with institutional pricing expected later Tuesday.
In the retail order period, demand felt weak. "It was priced on the full side for the tax-exempt portion," he said. "It was a split rating and priced in the middle of the road. We did not participate because it was priced too aggressively on the tax-exempt side and there was not a lot of compensation for the litigation risk."
Elsewhere in the primary market, Raymond James is expected to price $288.8 million of Tennessee's Metropolitan Government of Nashville and Davidson County general obligation refunding bonds, rated Aa1 by Moody's Investors Service and AA by Standard & Poor's.
In the competitive market, The Florida State Board of Education should auction $325 million of public education capital outlay refunding bonds, rated Aa1 by Moody's and AAA by Standard & Poor's and Fitch Ratings.
Most reads on the municipal bond market showed softening Monday after a weaker Friday.
The Municipal Market Data scale ended lower. The 10-year yield jumped four basis points to 1.79% while the 30-year yield increased three basis points to 2.82%. The two-year yield rose one basis point to 0.34% after trading steady at 0.33% for seven consecutive trading sessions.
The Municipal Market Advisors 5% coupon triple-A benchmark scale also showed weakening. The 10-year yield rose four basis points to 1.81% while the 30-year yield jumped three basis points to 2.91%. The two-year yield increased one basis point to 0.35% after trading steady at 0.34% for nine consecutive trading sessions.
After a weaker session Monday, Treasuries were slightly stronger Tuesday. The benchmark 10-year yield and the 30-year yield fell one basis point each to 1.97% and 3.15%, respectively. The two-year was steady at 0.29%.
